My prior post regarding the virtues of attaining financial literacy has energized me to go deeper into the basics of personal finance so that you may benefit from my experiences (including failures) regarding wealth building. Briefly, in my mid-50s I have a net worth approaching $2 million having started from scratch and received no inheritances or large gifts from anyone. I’m 100% debt free and living in a condominium that I own outright. Honestly, 10 years ago (immediately following a difficult divorce) I couldn’t have imagined that I’d be in this financial position, which I’m very happy with. If you would like to know how I got here then please read the next few posts which will be on the topic of personal finance and wealth building. The focus of this post will be the cornerstone of wealth building and that’s your monthly budget. A monthly budget is not a sexy or exciting financial concept for most people. Most people consider a budget to be a financial albatross. Then again, most people are not achieving their financial goals…if they have financial goals at all. This is supported by data from the 2023 Federal Reserve Report on Economic Well-Being of U.S. Households which revealed (here) that 51% of adults do not have the cash to cover a $400 emergency expense and that 52% of adults have less than $2,000 in savings.
A good monthly budget that you stick to is the cornerstone of a solid financial plan and a successful financial future. A budget is not a financial albatross. Quite the opposite. It’s a road map to wealth. Follow the budget and you’ll find success. Go off the map and who knows where you’ll end up. People who live without a budget often find that they’re confused as to where their money is going. Eventually they get frustrated with the lack of control they seem to have over their money. This can turn into a vicious cycle where a person who is frustrated decides to avoid really looking at their finances for fear of what they might find out. Which only makes the situation worse. After a certain amount of time things may get so bad that a person either has a breakdown or a break through. I had the latter over 20 years ago. What I know now is that neither of those situations need to occur as long as you embrace the idea that a budget is important and get to work on one. Budgeting can be quite complicated as life becomes more complicated. That’s a great reason to start a budget when life is simple because the practice of maintaining a budget when life is simple and the numbers are small will make maintaining that budget much easier when life is more complicated.
Continue reading “Creating And Sticking To A Monthly Budget”
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