What is financial Budgeting?

Financial Budgeting is the primary way that you can take control of your finances. Simply put, a financial budget is a written plan for how much you earn and how you will spend it. You can create a monthly, quarterly or an annual budget. The budget allows you to make financial decisions ahead of time, which makes it easier to cover all your expenses throughout the year. Financial Budgeting consistently can help you turn your finances around and begin to build wealth.

Creating a Financial Budget

• Begin by listing your income for the month. This should include any pay checks you receive, as well as income from other sources like child support or investments. If you have a business, you should include the amount that you pay yourself out of the business each month.

• List your expenses starting with the most important to the least important. Listing the expenses in order makes it easier to make cuts in your budget if needed. The most important should be things that cover your necessities. You will need to cover your housing, food, utilities (not including cable television), transportation costs, debt payments, and savings goals first. Then you will list luxury items which can include clothing, entertainment, eating out and gym memberships.

• Once you have a list of your expenses and your income, you will need to compare the two numbers. Your expenses should be less than or equal to your income. If you have additional money after you plan your budget, you can add it to the categories for your financial goals like getting out of debt or building an emergency fund. If you have more expenses than income, you will need to find ways to cut back on your expenses

• You will need to track your spending and stop when you have reached the limit in each category. This is when you start budgeting. If you do not stick to your categories, then you will not stick to your budget.

• Finally, do it again. After you have completed your first month of budgeting, it will be easier to plan for the next month.

Understanding your Goals and objectives

• Maintain your standard of living during retirement.

• Pay less tax.

• Maintain your family's standard of living in the event of your death or disability.

• Become financially independent.

• Preserve your estate for your heirs.

• Provide for your children's education.

• Pay off your mortgage and other debts.

• Stay ahead of inflation.

• Earn a higher rate of return on your investments.

• Buy a home or recreational property.

• Learn to invest and manage money wisely.

• Start your own business.

Setting a financial goal and how you can achieve it

• Figure out what matters to you: Before creating a financial plan, you need to understand your goals

• Prioritize: Goals needs to be prioritized and quantified. After you've pulled together all of your financial information and you've made a list of goals based on that data, you're ready to prioritize

• Create a realistic budget: In order to achieve your goals, you need a budget, one that takes all of your expenses into account.

• Automate: After you've figured out your expenses, then you can figure out how much income you have left to put aside into savings and retirement

• Check on your progress: Once you've made a plan, make sure you check in regularly so that you stay on track

Measuring and monitoring performance MONITORING:

• Continuous. Clarifies budget objectives

• Links activities and their resources to objectives

• Translates objectives into performance indicators and set targets

• What needs to happen now to reach your budget goal?

MEASURING:

• Periodic. Analyses why intended results were or were not achieved

• Assesses specific causal contributions of activities to results

• Examines implementation process

• Have we achieved our goal?