Families across the country have had difficult times financially, in the presence of a tough economy. Financial independence can be attained with some discipline and perseverance… it all starts with a plan and the dedication to follow through with sticking to a budget.
Road Map to Success
Books, budgeting articles, and financial advisors talk about it: the need to get out of debt and invest or save your money for retirement. Whether you want to save for a big purchase, want to save up for a down payment on a home, or you want to become financially independent… the road to meeting your personal finance goals are all found in one place: your budget.
Photo: Images of Money
You may feel like you’ve heard it all before. Putting it into practice takes a bit more dedication. Ensure that you are keeping track of your budget, and that both you and your spouse are dedicated to participating. The importance of keeping up-to-date with your budget cannot be overstated. After all, what is the point of a budget that is not updated? If keeping a budget is a little disturbing, there are ways to get around this. Download an app or two to use on your smartphone with a high level of convenience; they can go hand in hand with the full-on computer version Use the pen-and-paper method, or your standard spreadsheet.
It’s kind of like losing weight, as an analogy. The budget in becoming financially independent can be compared to proper dieting in healthy living. How do you expect to manage your money without a budget? How would you expect to lose weight or stay healthy without eating properly? As a a reference point, a budget is a tool that will direct you towards changes and help you reach your goals.
Goal Setting
Relax. We’re not going to talk about the budget anymore, minus a few references. When we talk about “budgeting,” we now look at spending money reasonably and making good decisions.
That has to be part of the mix. You can’t expect to reach the goal of financial independence if you are spending $300 on restaurants each month with a $2000 income. That would not obviously be the best way to reach your goal, if it could happen.
When you look at budgeting as a family, you may encounter a two-fold process:
- Working on the problem areas
- Proactively making good financial choices
The specifics of this will be dependent on your personal spending habits. You may have to curb eating out (my big downfall!) and entertainment expenses, as these two are extremely common abuses connected to our budgets. Also, you may consider downsizing a bit – getting rid of cable for a streaming media option, or losing the land line for your cell phone. On a day-to-day basis, you’ll learn that living a frugal lifestyle will save your family money.
Once you get specific items under control, you can aim at your financial goals. Perhaps it’s the purchase of a first home or saving up for retirement. You might want some income from your investments. Having goals will make the earlier part of this section easier, by the way.
If you’ve been considering how your family will ever become financially independent, this process may indeed begin with the budget. Budgeting, and your financial goals are a very powerful part of living responsibly, and providing your self and your family with a comfortable way of life.
What items have you had to cut from your budget in order to become financially stable? Which budgeting method works best for you? Comment below and share your personal finance experiences!
