Money is a touchy and private subject. Many want to get their finances in order prior to asking for help. But when it comes to finances there is no one size fits all solution. Budgets are sexy because it’s a plan; it’s almost always a win-win situation. This is important because it is going to help you understand where you spend your money, and if it is an investment or a debt. I have to be honest finances are one of my least favorite things, and while I am no expert on the stock market, housing market, and don’t claim to be Suzy Orman, Dave Ramsey, Robert Kiosyaki, or any other financial expert I can promise you that when you know how and where your money is being spent it pays off, and in a big way.
Everyone makes money mistakes.
Yes, even the rich and famous. I was having a phone conversation with a great multi-millionaire friend of mine who lives in San Diego. We happened to be talking about money, it’s a typical conversation many people have on a daily basis without even realizing it. I wanted to share this story with you because the valuable insight goes to show that just because you have money doesn’t mean you know how to spend it. Then I want to teach you 5 simple reasons you should have a budget, so that you can save yourself from making the same lethal mistake.
With a great reputation in the speaking and network marketing industry, Jim decided it was time for a change. He decided he wanted to explore the possibilities of creating his own winery in southern California, so he took out a second mortgage on his estate, cashed in his 401K, retirement, and any other investments for a total of $900,000.00. And, while he knew nothing about wine it seemed like the perfect opportunity to capitalize on. Months down the road he could see that his investment was taking a toll on both him and his relationship, he lost his girlfriend, his business, and more than a million dollars. But hey, on the bright he took a risk and while it didn’t pay off he did learn a valuable lesson that paying a second mortgage with a higher interest rate is one of the worst mistakes you can make. And only money can buy your way out. While Jim has recouped his lost investment, kept his home, and is still very successful there are lessons to be learned.
1. What you measure you can improve.
Money can be measured in a variety of different ways, through excel spreadsheets, mobile apps, accounting firms, etc… Managing money can be fun and exhilarating but the bottom line is that you can’t measure what you don’t manage.
2. Having a budget keeps you honest.
Have you ever really taken a serious look at where you spend your money? If you have you may have realized that the money you spent is also costing you time, and with that being the most valuable resource we have, who can afford to cut corners when it comes to financial freedom. So many of us don’t want to look at the entire picture, because the entire picture tells a story, and it’s a story many of us would rather avoid or not be in. Let’s face it, I myself have avoided looking at my finances for years before I came to the realization that tracking my money really does matter. It not only keeps me honest about how much I spend, and where I spend it, but I love that my money now works for me vs. me working for my money. And, who doesn’t want that opportunity?
3. Having a budget builds discipline and organization while forcing you to think about money.
If you have ever accomplished anything in life you know that when you decide to get serious and commit to making a change, only then will discipline and action will get you the results you desire. But the fact of the matter is most of us discipline our children more than we discipline ourselves, which is why are finances are in ruin. Why not hold ourselves to a higher standard and really focus on where we spend our money so that we can not only get out of the financial burden but build a lifestyle we enjoy?
4. Having a budget helps you pay off debt and get ahead.
If you’re only paying the interest on your loans you are far from getting ahead. Creating a budget allows you to consolidate and liquidate debt at a faster ratio then simply paying when and if you feel like it. Millions of us have a mortgage, cars, student loans, and credit card debt if we added up all of the interest and payments made we would find money left on the table. But that will never happen until you create a budget, and stick to it. Which brings me to the final reason why budgets are sexy because…
5. Having a budget keeps you accountable.
When you’re accountable your standards start to increase, your investments start to grow, and you start to see results and opportunities where there otherwise was none. Accountability is the number one factor you need to be successful at anything in life. If you don’t hold yourself accountable no one else will, and how can you expect them to.
I want to leave you with this thought that budgets are necessary if you want to improve your life and manage your money. So you have a decision to make you can start now or wait until it’s too late.
Melissa Krivachek is President of Briella Arion and deeply & passionately committed to the growth & effectiveness of leaders, teams, and organizations. Melissa is a High Caliber Leadership, Sales, and Personal Growth Expert, Author, Speaker, Coach, and Life Enthusiast! To IGNITE your Purpose, Presence, Passion, & Profit visit Briellaarion.com or Ignite-Leadership.com.
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Category: Money Basics