Maintaining your Wealth
As a former financial advisor, I incorporated personal budgeting for applicable clients as part of their comprehensive financial plan, a key aspect to building and maintaining wealth. The four keys to wealth management are:
2 Managing you expenditures
3 Saving and investing
4 Being responsible with credit
Personal budgeting strategies can help tighten outflows and preserve inflows. Here are some tips on budgeting:
Top Ten Personal Budgeting Tips
Review your Monthly Outflow Expenses
Keep a list of your regular monthly expenses that includes all expenditures, even maintenance items, dining, entertainment, and hobbies. Also, reflected in the list must be payments towards your debts.
I recommended using a free budget worksheet, easily available for free on the web, if not; just use paper/pencil to document your expenses.
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Ascertain your Budget
Subtract your expenses from earnings and see what the answer is. The result reflects how much you will have left at the end of the month. The accuracy of your results depends on the accuracy of your data.
Readjust your Budget as Needed
Re-evaluate your expenses if your end figure is not your liking, see if there are any opportunities to cut back.
Budget Must Include Any Debt Reduction Avenues
The budget worksheet should include your regular monthly debt payments. If you have extra funds available at the end of the month, you can use part or all of it towards paying off your debt.
Assess your Financial Goals
What are your goals? Is it retirement by age 55 or pre-funding your children’s college education? Whatever, your goals and dreams are, survey your budget to discover the best avenues to reach your goals.
Implement Proactive Personal Budgeting Strategies
Once the mechanics of a budget are covered and financial goals set, become proactive and start “living” your new budget.
Appraise your Personal Budget
After a three to six months, evaluate the personal budgeting process to see if the end results meet your initial expectations; If not, self-reflect , remedy discrepancies and seize opportunities for improvements.
Re-appraise your Budget
After the initial appraisal, if you are on track, well and good. However, if you are not meeting your targets, don’t give up. Re-assess, re-adjust, and reinforce.
One Path towards Financial Success
Your budget is not static, it is an evolving component of your overall financial picture. If you are to become financially successful, you have to be financially disciplined.