By Mckenna Gustafson, executive assistant to Randy Russon, founder of TOP CFOS
When asked about their most important financial goal, people generally agree that sticking to a budget is the most important to them. It’s shocking to note that while this is the case, fifty-seven percent of households don’t have a budget according to a recent study by Harris interactive.
Here are five simple ways to get started in combating this national trend and achieving a level of financial freedom where your money works for you.
- Spend less than you earn. It is not about how much you make as long as you can follow this simple rule. As long as the credits are more than the debits, you can stay in the green. It is a simple principle, but much harder to put into practice. Just ask a politician.
- Ask yourself a few questions before making a purchase. Money experts recommend talking through the buying process with yourself or someone else before making a purchase. You may consider asking three simple questions before making a major financial decision: Do I need it? Do I need it now? Can I live without it? You may even want to take a night to sleep on the decision and come back to it in the morning with a fresh perspective.
- Distinguish between needs, ‘shoulds’, and wants. Think about what purchases you generally make in each of these categories. Consider gradually putting aside more and more money each month that can be used for the ‘shoulds’ such as charity or retirement. Not sure where to get this money from? Try looking at your wants categories to see if there are any areas where spending can be curbed. Did you know that you can save $112,000 over a lifetime by simply bringing your lunch with you to work? That’s a small thing that really adds up and can be used toward other worthy causes.
- Go gradually. Don’t think that you need to become completely perfect in your budget within the first month. The categories where spending doesn’t quite match up with your budget only mean that you have the chance to improve. Next month is a new month, a clean sheet, so start over and try again.
- Be realistic! It’s better to be realistic in your budget than to make it too tight and to fail miserably month after month. You can always continue to improve. Start where you are and work on improving your saving and curbing your spending each month.
Whether in your personal life or your business, having a budget gives you financial freedom and security. As money expert Dave Ramsey has said, “A budget is telling your money where to go, not wondering where it went.”
Here at TOP CFOS we strongly believe that smart financial management has the power to transform mediocre businesses into top-performing companies. We would love to meet with you and show you how our financial techniques, including budgeting and financial analysis, can help you grow your business. Please contact us below for more information.
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