FINANCIAL Budgeting 101 The term “budget” often gets a negative connotation. The term is often tied to restrictions, having less, or buying offbrand mac-n-cheese. This author would argue the …
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FINANCIAL
Budgeting 101
The term “budget” often gets a negative connotation. The term is often tied to restrictions, having less, or buying offbrand mac-n-cheese. This author would argue the negativity around the term is bread from those that don’t budget and don’t understand the liberating aspects of budgeting. The geting with future articles to be more specific in regards to establishing and maintaining a budget.
Discipline, not luck, creates wealth. Budgeting directs and controls financial decisions. Budgeting is about being proactive and being in control of your money. In budgeting, the dog wags the tail, not the other way around.
Life is a lot easier with the right tools. A budget is the roadmap, the tool needed, to create direction and purpose with your money. It is easy to get lost without a map.
If married, budgeting should be done mutually, with equal input from both spouses. Another benefit of budget ing is it creates discourse between spouses. It coordinates financial goals. Communicate with your partner on goals, priorities, challenges and celebrate successes!
Budgeting is elastic; it changes and evolves. Your finan cial priorities today will be different a year and ten years from now. Budgeting is done prior to the next months beginning so you have a playbook for that month. This month’s budget is this month’s roadmap. Each month, you will decide on the roadmap of financial priorities for that month. Budgeting is not about being restrictive, it is about freedom.
When dealing with financial affairs, we often focus our attention on those things that don’t matter. We worry about things we cannot control and miss larger day-to-day de- cisions that have a much more significant impact on our long-term financial well-being. Which is more impactful to your long-term financial health: uncontrollable things like the price of gold or direction of Federal Reserve policy, or controllable habits like consistently creating and following a monthly budget?
The next two monthly financial articles will dig deeper into budgeting, how to budget and how to overcome some of the more common budgeting challenges.
Adam Smit is CERTIFIED FINANCIAL PLANNER™ and a registered principal of LPL Financial.
This article is for general information only and not in- tended to provide specific advice or recommendations for any individual.
Securities offered through LPL Financial. Member FINRA/ SIPC.
BY ADAM SMIT