Thursday, February 21, 2008

Budget As A Priority

If you have ten thousand, would you spend twenty thousand? Of course not! But what if the monthly bills exceed that ten thousand?

According to a new research done by Friends Provident, consumers in the UK placed budgeting as their topmost financial priority. But I don’t think that is something new. In heydays, budgeting is often left to the accountants and number-crunchers. If the inflows exceed the outflows, there is little difficulty in budgeting. But in times when there is a global credit crunch, like what is happening in the world economy today, tightening of the financial belt is expected.

I’m not going to be harsh in my example. Let’s say that after deducting all of the recurring monthly expenses and the mortgages installments, you are still short by five hundred bucks. What would you do?

First, you need to find ways to increase your income legally, like working in two jobs or some business endeavors. If one is employed, there is a certain ceiling to the earnings, unlike when one is into business whose earning potential is limitless.

Second, is to streamline your expenses. If the mortgages consume half of your income, you need to seek advice on restructuring some of them. Cut on those unnecessary expenses that satisfy only your vices. In other words, save up to the last cent.

But if you have excess funds, don’t throw them away. Cancel out high interest debts. Invest your money wisely and make it work for you. Budgeting is an excellent tool to manage your finances better.

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