Budgeting is the process of creating a plan to spend your money.
This spending plan is called a budget.
Budgeting allows you to determine in advance, if you will have enough money to do the things you wish to do. If you do not have enough money, then you can prioritize your spending and focus your money on the things that are most important to you.
A realistic budget can be developed by taking time to evaluate current financial situation, spending patterns and goals. The budget should also be consistent with your lifestyle, family situation and personal values.
You can download a Sample Budget.
Setting a budget will assist in highlighting some of the important questions, such as:
- What are the sources of my income?
- Where are my expenses?
- Is my money being channeled towards the achievement of my priorities?
- Am I spending more than I am making?
In establishing the budget and goals, one should be realistic and honest.
A financial planner can help you map out a timeline to consider where you would like to be financially in 3, 5, 10 or 20 years’ time. Changes will be anticipated in the areas of career, children’s education, etc, and a timeline should be made for when these
responsibilities are expected to happen.
Then put a dollar value on each of these goals. What will it take to achieve them? This will greatly assist you in allocating your financial resources to meet the eventual financial commitments.
The budget should be monitored and evaluated on a regular basis, to ensure that any changes in the finances and lifestyles of individuals is reflected. The budget can be affected by many things, like change in employment, increased family member, etc. The purpose of monitoring the budget is really to track expenses and see how well the individual is progressing towards achieving financial goals.
If you need help in creating and monitoring your budget, please contact your trusted FLA Financial Planner for assistance today.
