Adhering to the principles of budgeting and controlling the urge to spend can play a major role in creating wealth. Combined, budgeting and debt management determine how much money you have for buying a house, for funneling some of your income into a retirement account, and for buying stocks, bonds, or mutual funds in an investment account.
When you live according to your budget, you are living within your means, and when you control debt you are keeping yourself from the clutches of financial forces that can easily swamp your life. Both practices will help you fortify your finances against the bad times that can occur in families, in economies, or in financial markets. Budgets and debt controls will allow you to carve out part of your income for investment purposes, which is how families build financial security.
Every successful financial life begins with a budget. In good times, budgets give you the freedom to make spending decisions that enhance your life, improve your lifestyle, or allow you to prepare for the future. In bad times, they keep you true to your necessary expenses while highlighting the extraneous costs that you can cut to conserve capital.
Budgets are not evil creatures. They do not aim to keep you from spending your money on what makes you happy. The are not the equivalent of a monetary straitjacket that provides no wiggle room. Used properly, a budget can be enlightening and liberating.
It can show you where you are spending too much on items that ultimately mean very little to you, and it can show you where you are spending too little o the things that mean the most to you. If your financial life feels like a path through the darkness, as many people feel theirs is, then a budget is the nightlight to show you the way.
Too often people structure their fixed costs with little regard to their discretionary spending. Then, they go about their month spending as they normally would on discretionary purchases, allowing their finances to suffer.
That's where budgeting comes in. Budgeting is not a complicated task. It's not highbrow math and no MBA is required. You don't need spreadsheets, though you can use one if you want to speed up the process. You don't need computer budgeting programs. All you need is a desire to take control of your finances with a single piece of paper and something to write with.
Your discretionary income is all that you have to fund your wants for the month. Spend more than that, and you are digging yourself into a hole. Spend less, and you are building an ever stronger fortification around your finances.
Why Do I Run Out Of Money can be found in the book, Right On The Money by Pat Robertson. In his book, Mr. Robertson shares important information about preparing for the future by budgeting and accumulating wealth through saving and investing.