Being able to plan your expenditure against your outgoings is essential to achieving financial independence and security. It is called budgeting, and though it is not rocket science it is something far too many people just don’t think about. This isn’t about cutting back and not having any fun, but about knowing where the money is coming from and where it is going to be going to.
When you are struggling by on a really low income, budgeting is such a necessity that you have to face up to it. It is when you are feeling a bit more comfortable that laziness can kick in. In order to manage your money effectively you need to realise that you are going to want to enjoy your money and spend it on the good things in life.
A good example is Christmas. For most people the festive period is the most expensive time of year. Although everybody always complains about Christmas advertising coming earlier every year (such a cliche) it makes sense to make the purchasing decisions that you will have to make sooner rather than later.
Unless you feel like a Scrooge and decide to cancel this year, you will be spending a fair whack on the food and drink to celebrate with. You don’t want to scrimp, and you know you will buy it anyway, so why not invest in some Christmas hampers now and know you have got something out of the way?
Present buying is also always expensive. Again there is a big advantage in planning in advance what you are going to be giving to the folks that you care about. Even if you don’t purchase the items until the last minute, knowing what you are going to get for everyone lets you plan for the outlay as well as being able to find the best prices.
I completely agree with you here. Knowing where the money is going is half the battle. Once you know where it’s going, you can come up with a plan for how to spend. Then the hard part kicks in – trying to actually implement the plan.
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