Budgeting Your Way to Financial Freedom

Financial freedom cannot be achieved without budgeting. Budgeting involves tracking your sources of income and more importantly tracking your expenses. It is novel tool for controlling your expenses and making you aware of how you spend your money. At the outset, budgeting may seem to be onerous and boring, particularly for those of us who hate numbers. But once you realize the benefits emanating from it, you will find it an interesting exercise. Even businesses, whether small or large, use budgeting as a tool to achieve their financial goals. It is, in fact, an integral part of managing an organization.

Benefits of budgeting:

Helps to control impulse buying.

Helps to control your expenses.

Ensures that you pay your bills on time.

Helps you to borrow money when you need it.

Helps you by not defaulting on your loan repayments, thus, protecting your credit rating.

Helps you to save money which can routed to different investment vehicles that can in turn help you build your net worth over a period of time.

The budgeting process

The first step in the budgeting process is to determine your net worth.

Your net worth = the value of all your assets less all the liabilities or loans that you owe.

The second step is to identify your sources of income and the amount from each source. Your sources of income could be salary, business income, investment income such as dividends, interest, rent. Your most recent tax return and bank account can be an excellent source for identifying your income sources.

The third step is to identify your expenditure items such as groceries, entertainment, mortgage payments, loan repayments, housing repairs, transportation, taxes.

Prepare a spreadsheet with the following columns: a) description for each item in the two sections viz. income and expenditure b) actual amount c) budget amount d) difference (between actual and budget amount) e) reason to be given if the actual amount exceeds the budget amount.

It is very important to ensure that you provide at least 10% of your gross income towards savings. A formula should be in place in your budget spreadsheet that will automatically calculate 10% of your gross earnings. The objective of budgeting will be defeated if it does not lead to targeted savings.

Budgeting should generally be done on a monthly basis. It is very important for you to enter all the amounts that you spend into the spreadsheet. This will require a disciplined approach but in the long-run, it would definitely be worth it. Keep a separate paper file for each year divided into sections based upon the items of income and expenditure for filing your bills.

Read More Free Investment, Wealth Creation & Personal Finance Articles & Tutorials at: http://www.global-investment-institute.com/

The Global Investment Institute has been setup to aid people in the pursuit of a better lifestyle through managing their money effectively, investing wisely and wealth planning for their future.

---

Take Control and Master Your Kitchen

Those who keep a watchful eye on where their money... Read More

Resources to Help You Learn About and Protect Yourself from Identity Theft

There is a new bill that is being passes, it... Read More

Bank On It: Places to Hide and Invest Money

Today I passed a thermometer at a bank that read... Read More

Personal Checks ? Extreme Benefits

Millions of people have a checking account and many people... Read More

How to Balance Your Checkbook ? Get a Calculator and Pencil and You are Ready To Go!

Despite how easy it is to balance a checkbook, very... Read More

Saving Money - Are You Doing Enough?

It is estimated that we, as consumers, waste an average... Read More

Improving Your Financial Position

If you want money you need to learn how to... Read More

Creating A Household Budget

Creating a budget can be a very difficult task. Although... Read More

The Magic Of Compound Interest

Christians are called to be good stewards of God's resources.... Read More

How To Get Ahead On A Low Income

Do you struggle from week to week trying to make... Read More

First Checking Account ? When is it Time?

We all know that money doesn't grow on trees, but... Read More

Banks Are More Than Just A Place To Park Your Money

If you've been to a shopping mall lately, you've probably... Read More

10 Steps To Improve Your Financial Situation

Here are ten steps you can follow to help improve... Read More

Bankruptcy Laws Get Tougher - More Expensive

If you've been thinking about filing for bankruptcy, your best... Read More

10 Money-Saving Tips

1. If you have your haircut every 3 weeks, try... Read More

Strategies for Success

Holy Shenanigans! More STUFF?Loosing one's business due to lack of... Read More

UK Parents Inactivity Harming Their Children?s Future University and Mortgage Savings

The British government at the beginning of this year officially... Read More

I Want to Buy a Home - Now What?

If you were to ask 100 women "What would you... Read More

A Fresh Start for Family Finances in 2005

While 40% to 50% of us make New Year's resolutions... Read More

Tips To Save Money At The Supermarket

Are you interested in saving money off your grocery bills?... Read More

Budgeting Your Way to Financial Freedom

Financial freedom cannot be achieved without budgeting. Budgeting involves tracking... Read More

Planning Ahead with Your Finances

If you, like most people, have not seriously considered what... Read More

College Expenses: Seven Ways to Save on an Education

Many people graduate from college owing thousands of dollars in... Read More

Planning Your Financial Future

Millions of people give a lot of thought to financial... Read More

How to Choose Wisely a Credit Card

So, you've made the decision to apply for a credit... Read More

10 Steps to Take if You Are a Victim of Identity Theft

There have been an estimated 9.9 million victims on America... Read More

Know Thy Finances

The first step to financial success lies in knowing your... Read More

Are You Sick of the Financial Insecurity of Fluctuating Seasons and Income?

Finding a stable and secure income that will come year... Read More

10 Quick And Cheap Ways To Cut Your Heating Bill

When you received an energy (heating) bill last winter, were... Read More

Knowing Me, Knowing You: Why ID Protection Plans Are Flawed For Fraud

ID theft is a major consumer concern, though there is... Read More

Grocery Savings - Your Kitchen is a Goldmine!

Your food budget is the most flexible area of your... Read More

Live Green; Save Green!

Have you seen the recent article on a new "green"... Read More

Top 10 Ways Managing Your Money Is Just Like Riding a Bike

An avid cyclist and bike racing fan, I sit transfixed... Read More