FINANCIAL GOALS (PART 3)
HOW TO KEEP YOUR INCOME GREATER THAN YOUR EXPENSES
Living within your means is simple. When you take out your expenses from your income, what you earn must be a positive figure. If you happen to get a negative figure, it means you are not living within your means. If you are in the positive, keep it up. Try to save even more, if you can. If you are in the negative, do not panic. Take control:
1. Distinguish between your wants and needs-This may sound easy. Example if you do not have easy access to another form of transportation, a car is a need but a nice car is a want.
2.Create a budget- Just having a general goal in mind for how much you can spend on certain expenses—food, entertainment, housing, transportation—over a certain time period can help you make smarter spending decisions.
3. Avoid your spending triggers- Maintain your discipline, and try to resist the temptation of spending. If you overfill your cart when you go to the grocery store and shopping malls before dinner, do not shop on an empty stomach.
MATCHING YOUR BUDGET TO YOUR GOALS
Budgets and goals do not work in isolation. To be able to match your budget to your goals, there is the need to:
Think about the reasons you want to be strategic about your spending. These reasons can be to build a buffer against emergencies and unforeseen events, having some free funds to be able to embark on a project etc. when you are able to identify the reasons and benefits for budgeting; you are likely to stick to it.
1. Pick spending categories: the effectiveness of your budget is hinged on your ability to customize and fit it to your expenses and personality. Break your routine expenses into categories like rent, education, utilities, food etc.
2. Make financial allocations to each category- decide on how much you can spend on each of the categories. Create a goal for each of the spending categories.
3. Make your expenses from your goals: associate your transactions with the corresponding goal and cateory.
4.Make your expenses from your goals: associate your transactions with the corresponding goal and category.
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