Why do a budget?
by Wealth Know How in Budgeting
There are constant calls on your hard earned money that can include paying those bills, shopping for that treat or making an investment for the future. In a world full of expenses and tempting options we explain why it’s so important that you set your priorities and create a budget.
- sponsor - Wealth Know How
Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.
Published on 17 Jul 14
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There are constant calls on your hard earned money that can include paying those bills, shopping for that treat or making an investment for the future. In a world full of expenses and tempting options we explain why it’s so important that you set your priorities and create a budget.
Sponsor - Wealth Know How
Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.
-
Venezuela tension heats up
Duration 03:16
-
Aussie dollar surprises market
Duration 03:10
-
Markets climb as investors watch US healthcare bill
Duration 02:31
If you work 30 years at the average wage, you’re looking at an income of close to $1.7 million in today’s dollars.
That should mean that everyone is capable of saving and investing and living in financial security. Unfortunately, people have costs and expenses, too, and if these are not watched carefully, they can overwhelm the household income, and saving becomes difficult – let alone investing.
In a world full of tempting investments, like shares; negative gearing property and alternative assets, budgeting sounds boring – it’s something that your parents and grandparents banged on about. But it shouldn’t be boring, because it’s the key to financial independence.
The basics of budgeting is to list everything that comes into your house as income, and everything that goes out of your house as spending. What is left over is the money you have available to save, or invest. If you don’t have anything left over, then you are borrowing and getting further into debt. You’ll then need to figure out what you can cut from your monthly spending to give you a surplus.
Jotting all income and spending down will help you to sort out your financial priorities, get control of your spending, and if necessary get on top of your debt. If you’re living from payday to payday, a sensible budget gives you a chance to get off this treadmill and start getting ahead.
Once you’ve got a budget in place you can start saving; pay down debt and once you’ve got enough money saved, you can start investing for the future.
If you have a budget in place, and you stick to it, it will help you save for a house, repay your mortgage earlier, and invest in the share market or managed funds, where the power of long-term compounding can start to generate wealth for you and your family.
A budget can also help you boost your super savings by making additional contributions over and above the compulsory contribution.
There are many tools and apps on the web to assist with making a budget and also financial advisers who can help you put a budget into action – and start building your financial future.