Tag Archives: financial tips

Lifestyle

Planning Your Ideal Budget

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Developing a budget does not mean adding up the total income you have to work with each month, then allocating funds within that level. The definition is: “planned expenditures and a program for financing them.” Figure out what you want to spend each month in order to live the life you desire while maintaining your true priorities, then look for ways to fund this budget.

Why? You might not know how you’ll earn the income that you’d like for your ideal budget when you first make it, but you’ll also never find out if you don’t start asking. Your option is to continue to scrimp and deny yourself the lifestyle you’d like to live and end up looking back on your life with regret. You might also find that when you make your ideal budget, it isn’t really as far off as you had imagined before you put it on paper in black and white.

Financial Goals, Lifestyle

Doing the Impossible

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If a situation seems impossible, ask yourself if anyone has ever done anything similar before. If so, find someone or someplace to help you find out how they did it. Often people will say they are too old, too young, too broke, too tired, or too busy to do something they really want or need to do. Look harder. If you think you can, you will; if you think you can’t, you won’t. Maybe there are other ways of accomplishing the task at hand besides the ones you have already tried or heard of. If it’s that important, keep asking until you find the answers you need.

Why? Quite simply, even if a task or situation has never been done before to the best of your knowledge, does that mean you abandon the idea? That’s your choice, but history has proven over and over again that human ingenuity and perseverance are key components to creating anything new. If you want something different, find successful people to associate with. They don’t necessarily have to have done exactly what you’ve done before, but they will have had experiences of setting goals and reaching them, which is invaluable support if you are intending to make changes to your financial situation. Creating new associations is like making new friends: you don’t have to lose the old friends; you just have to be willing to go places, and do things where you are likely to at least hear the conversations of people who are already experiencing the sort of lifestyle you desire.

Financial Tips

Do You Have an Income Surplus or Deficit?

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Budgeting, retirement planning and business planning all require you to project what your current and future cash flow requirements will be. It’s interesting how often people say they have a business plan, yet they have no financial projections to support the marketing efforts they have planned. It’s equally as perplexing to hear the comments people make when discussing how much their lifestyle will cost them after they leave work. The idea of projecting a budget seems almost impossible so they choose to focus on how much money they can accumulate instead. And on a day-to-day, month-by-month basis, creating a cash flow projection is a completely foreign concept to so many people, yet, it’s an absolutely critical tool for making just about every financial decision.

How? Regardless of whether you are making a projection for business, day-to-day life or retirement, simply start by listing the income you know you will be receiving each month for the timeframe you are projecting. Then, list the expenses you know you will have for that same period. Next, subtract the expenses to get either a surplus or deficit. If you have a surplus, then you can decide where to allocate that money. If you have a deficit, then you have to decide where you will come up with the shortfall. When you have done this for the month, carry on to the next month with the surplus or deficit accumulating from month-to-month.

Obviously, at some point, you will have to turn a deficit into a surplus. By projecting cash flow in this way, you now know how much of a deficit you’ll have given certain planned expenses and you’ll also be able to see what the return on your investment will be when you add income generating activities to your projections.

Financial Tips

Pay Yourself First

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Pay yourself first. “Ya, ya. I’ve heard this a thousand times,” you’re saying. “But, I have expenses. I have bills. The money comes in and it’s already allocated, and then some…”

How do you implement a “pay yourself first” strategy when you’ve already established your lifestyle without it? You just do, that’s how – with a little bit of strategic planning mixed in. As soon as you receive your next amount of money from any source, get it deposited into your checking account. Then, immediately transfer 10% of the proceeds to your savings account. This will be an account you set up at the bank for emergencies or opportunities, but not for specific purposes like saving for a vacation. In the same transaction, withdraw the amount of cash you need for the expenses and giving components of your financial plans. Then, leave the rest to pay your bills with, “Ya, but…” – I know. You said all the money was already allocated for other expenses. That’s okay. You are going to be keeping good records and balancing your checkbook. You will know exactly how much money you need for your bills, and if you get to the end of the month (or pay period) and find you’re short, “Wow!! Look at how well I’ve managed my finances. I have some money in my savings account to help out.”

“What if you need all the money in your savings account?” That’s okay. You are keeping good records so you might find that for the first few months you need to transfer 100% of the money from your savings account to your checking account but eventually, you will find that you might only need to transfer 50% of the money, and one day, you will look at the balance in the savings account and be amazed to find that it’s a sizable amount of money. How do you pay yourself first? You just do!! And keep doing, and keep doing, and keep doing for always and always!!