Have you received any text message that entices you to buy a condo unit or get an educational loan for your kids? This kind of messages reminded you of seasonal expenses. What I mean by seasonal expenses are tuition feeds, school supplies, utility bills and other expenses that occur every season/quarter. They might keep you motivated or in the other way, it makes you worry all the time.
These scenarios happen not only to set as a reminder but allow you think of your budget planning. This might sound difficult for you but if you really want to gain financial freedom, you have to start planning your budget. There may be a lot of decisions you need to choose but you need one. Decisions like saving some extra cash, selling old stuff, pawning jewelry, applying for a personal loan and borrowing money from friends are good ways to earn money but are not the best options to do.
Budget planning isn’t always about saving money. It refers to how you manage your monthly income like the allocation of it to pay various expenses at home and for your personal needs.
If you have a financial goal, you must have a budget plan to achieve it. Goals like saving up for a deposit or putting aside for investment or investment are easily achieved when they are tracked on a spreadsheet or notepad.
A budget helps you keep on track of the outflows and inflows of your cash. Be sure that you don’t spend more than what you earn and monitor your financial plan whether or not it reaches your goal.
It’s best to regularly visit your budget so that you will know what kind of living you need to stay on. Balance your earnings and spending effectively and you’ll get the most out of your finances.
Here are some common mistakes you need to avoid when creating your budget plan:
Not making a budget plan at all. I mentioned earlier the importance of a budget plan and how it does make you reach your goals and be rich as well.
Setting short-term goals. If you don’t want an upside down turn in your personal finances, you have to look for long term goals. Stay ahead at least a year to see regular and miscellaneous expenses such as holiday and birthday gifts.
Not comparing your estimates with actual. Your main goal of creating a budget plan is to track your monthly incomes and so if your estimated budget does not matches your actual budget, your future finance is no more than a guess. Keep it real always when making financial statements or plans. Make sure you compare your estimates with your actual results so you will have an idea of targeting a specific amount of savings every month.
Saving too little. It doesn’t matter if you save a little or large amount of money. The discipline of saving every month is what matters most and doing this consistently can set you on a rich mindset. You may setup an automatic deposit to your savings account from your paycheck. Look for banks that offer this kind of deposit system.
Making a detailed budget plan. It seems so difficult to put all the details of your monthly expenses especially when they are too long to put in a spreadsheet. For starters, you want a simple and easy to use budget plan so you can easily put the information and evaluate when you need it.
Neglecting to plan for emergency situation. There are emergencies we can’t necessarily prepare such as car repair or job loss. Like your savings, you need to set aside money for this type of expenses. Label them as emergency/miscellaneous in your budget planner.
Relying completely on your credit cards. Credit cards can help but should not be your main source of money. Relying completely on these can only make it difficult to achieve your financial goals.
Creating a regular budget planner is a must-have habit for those who wants to get rich and experience financial freedom as quickly as possible.
When did you consider budget planning as a habit in your entire life? Share to us today.