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Thursday, November 13, 2008

Budget or Burst

At one point or the other, whether you are in business or employed full time you must do some sort of Budgeting. Any one who earns some income need to have some sort of reconciliation between his/her monthly or weekly income and expenses. Most of us think that we need to earn more money in order to start budgeting, and the answer here is NO you don’t need a lot of money to have a budget for yourself. Remember that “Little is Much When Well Spend” and the more you get, the more you want. If for example you earn R2,000.00 per month, and your expenses are R3,500.00 per month, common sense tells you that you’re living far above your means. You won’t know that you’re living above your means if you don’t write down all your expenses for the month and comparing these to your income. This is Budgeting (Expenses v/s Income). Budgeting also goes further than just comparing income and expenses, but you also should identify specific culprits on your expenses and workout a plan on how you can target these expenses to ensure that your income always remain above your monthly costs. Budgeting also means that you’ll have a plan to set aside or save some % of your income for unforeseen circumstances such as an accident, death in the family, illness, education, unemployment, etc. it is unwise to leave from hand to mouth and have no plan for precautionary motives. The best way to financial independence begins with a plan to be debt free.

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