Maybe someone does not know what does the term “budget”, but when that someone is not from those that too much money, you better be aware of the meaning of this word sooner rather than later. Ideally, when any person obtaining revenue for the first time, their parents and should have taught him how to set your financial goals: short, the medium and long term.
Do they aspire to buy a home or abroad to study in someday? Or would you rather think of a car or traveling for pleasure? If they let it loose and grateful for life, also think that at some point be faced with the studies of children you have, care for their elderly parents or their own needs after retirement.
Unfortunately, most people who start their working life has little or no thought about it because it has received minimal financial education, either at home or during their school life. And when you least imagine that people will be a slave to your debt, a debt overhang which will no when to exit. For that reason, no matter how poor it is, the prespawning is the essential tool to take control of our personal finances and achieve our financial goals.
At first, the thought of making a budget sounds complicated, difficult and tortuous. However, the exercise is that sooner or later everyone will have to do to survive in an economy that increasingly promotes a consumer culture that even tries to manipulate our spiritual needs to tell us how to please them, instead of being light.
Basically the budget should serve to know how money is spent, to prioritize between compulsory, required and discretionary, whether one is able to pay claims which we gladly offer to save and achieve our long term goals for live with the down to earth and within our means, to create an emergency fund and to monitor any deviations to achieve our objectives.
The first step is to determine how much our monthly income amount. They may be salaries or wages, but also have to consider the tips and income from extra jobs. If there is any income you have a different frequency of monthly is assessed to find out how much is approximately monthly.
The second step is to identify all exits of money, absolutely all. One way is scored for a month each concept by which money is spent. Another way would be easier if every single penny we spend, we demand their respective receipt of payment and store it and then add them all to make ends meet, so we should not allow any expenses without documentation.
The third step is to verify that the sum of all expenditures does not exceed that of all income. Otherwise check is to ensure that we address poverty, which is only delayed (and worse) with easy access and irresponsible to credit cards.
Here we must make an analogy that can be very hard, but not entirely far-fetched. The credit is misused as drugs: they can give us comfort and calm our anxiety (financial) in the short term, but when wears off, leave us worse off. So, when I get the date to be paid, our anxiety increased (financial) will be needed, as with drugs, a higher dose.
Thus, if expenses exceed income, the only way to avoid future ruin is economizing, cutting costs. Otherwise, the deficit will accumulate and if there are interest charges and fees involved, as in the credits, the deficit will grow like a snowball. To prevent this from happening, the only way is that the costs should be less than income, how much?
Most experts suggest that the costs should not exceed 90% of revenue in order to be able to save at least 10% of revenue each month. However, this is insufficient when compared with the general criteria used by banks to lend. It is assumed that a prudent bank loans which never gives a total monthly payments are more than 30% of net income of individuals.
Why then experts suggest saving 10% of their income, while the banks themselves assume that their customers may pay 30% of their income? Or the experts are very conservative to require the effort of saving people or the banks are too risky to grant loans under conditions in which overestimate the capacity to pay (savings) of the people. Or is that all have conspired to knock us over the savings credit?
A better response might be tempted if the criteria would propose the opposite: people should try to save up to 30% of their income, so if indeed they do, then have no difficulty in paying their credit quotas, which is supposed not exceed that same 30% of their income. Or vice versa, if people are only able to save 10% of their income, maybe they should not accept debts that are forced to pay more of the same 10% of their monthly income saved previously.
And without savings, none of our financial targets medium to long term is possible. Any significant acquisition requires a significant capital accumulation. There are no miracles. Without savings we will not be achieved. It costs less if you save “before” purchasing, when we pay interest on savings, that when you save “after”, when instead of paying us the interest we charge, and much more. Savings alone will give us control of our financial situation. And one of the best ways to achieve savings is to develop a simple systematic and methodical control of personal or family budget.
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