Budgeting:
How to Make a Budget and Manage Your Money and Personal Finances like a Pro
Copyright 2016 by Jenny Holmquist
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I want to thank you and congratulate you for downloading the book, Budgeting: How to Make a Budget and Manage Your Money and Personal Finances like a Pro .
This book contains actionable steps and strategies on how to budget and manage your finances like a pro.
Many people are neck deep in debt and have very bad credit reports today because of lack of proper financial planning.
You see; the difference between the rich and the poor is that the rich have been able to quickly learn and understand that money management is a skill that must be carefully mastered. No matter how rich you are or how much money you make, you cannot stay wealthy for a long time if you dont know how to manage your money.
Earning a lot of money is not what makes you rich; knowing how to manage and utilize your money well is what would make you a wealthy person. As such, the art of budgeting is one of the most important things that you must master if you want to achieve financial freedom.
In this book, we break down the art of budgeting and personal finance in a way that is very easy to understand. When you are done reading this book, you will be able to create, monitor, and adjust your personal budget like a pro.
Thanks again for downloading this book, I hope you enjoy it!
Chapter 1: Budgeting Basics
What Is A Budget?
M any people wrongly think of budgeting as something that is only meant for broke people; something that you do when you are low on cash or when you have many expenses that exceed the money you have at your disposal.
But this is a wrong idea; budgeting is not only for broke people or for when you dont have access to enough money. It is something that everyone should do whether he or she is rich or poor.
Imagine living in a country without a budget? Or working with a company that has no clear financial plan? Of course, that would be a very disorganized and backward country or company.
Everybody needs a financial budget whether individual, company, or country as it is an invaluable tool that can be used to manage money and other resources. Budgeting helps you to pay close attention to your income and expenditure and most importantly, budgeting can make you rich.
Before I go on to teach you some of the other major reasons why you must have a budget, let me define what a budget is in simple terms. A budget is an itemized list or summary of all your projected income and expenses for a specific period of time. It details your income and how you plan to spend it. With a budget, you can get a concrete and vivid breakdown of the money you are making and how you are spending it.
Why You Must Have A Budget
T here are many reasons why it is important for everyone to have a budget but the most important ones include:
- Helps you identify wasteful expenditure : Have you ever had that feeling that you dont know where your money goes? Thats most likely because of a lot of wasteful expenditure on your part because you do not plan your expenditure properly and you end up spending your money spontaneously. Budgeting can help you become much more financially responsible and avoid wasteful spending and impulse buying.
- Helps you adapt to financial changes : Its true that the only constant thing in life is change. A single person might decide to get married, a married couple might decide to have children and a person who has no car might decide to purchase one. All of these are changes that would have an impact on your finances. However, with a clear budget, you can avoid panicking when such changes occur because you would be able to incorporate those changes into your budget easily.
- To achieve financial growth : To achieve financial growth, you need to save and invest. Without adequate financial planning and budgeting, you might be unable to save money and probably never invest. However, when you have a budget, you are able to adjust your expenses to accommodate some savings, which you can then invest to achieve financial growth.
- Reduces Stress : Nothing stresses a person as much as emergency financial expenses that they are unable to meet up with. Nobody wishes for emergencies but they happen anyway, which is why it is important to always be prepared for such expenses. With a good budget, you are able to leave out some money to take care of such emergences if they arise.
- Helps you plan for short and long-term goals : Budgeting will also make it easier for you to plan for and set aside some money to take care of your long-term goals as well as your short-term goals.
- Helps you use your money well : When you are creating your budget, you are thinking clearly and mapping out your expenditures to match your goals. You are different from a spontaneous spender who just spends money according to their emotional and sentimental needs. Therefore, with a clear budget, you are able to plan and use your money very well.
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