By: Roshawn Watson
Part 1: Where did my money go?
Whether you make $40,000 per year or $400,000, you can still be broke. People constantly ask me questions about their finances, especially with regards to planning for retirement, getting out of debt, or saving for education. It always amazes how some people waste so much money and then wonder why they are broke. Sometimes my frustration shows through, and they feel it necessary to justify wasting money. By far, the worst justification is “I have worked so hard and earn enough money, so I deserve to have nice things.” The news flash is a lot of people work very hard, but working hard alone is not good rationale for being financially irresponsible.
Some people both figuratively and literally mortgage their and their family’s future so that they can have some toys. Although eventually those things we buy lose their luster once you add up their true costs, the damage is already done. Sadly, these toys eat up cash flow so badly that there is little left to save and invest. The implications of that last statement are tremendous. Even if you earn a million dollars a year, financial intelligence is not measured by how much you make but rather by how much you keep.
If you happen to be one of several people who spend several hundreds and even thousands of dollars that you cannot account for each month, listen up. Without a budget, you may easily fall prey to “thinking” that your finances are in order, while they remain in a state of perpetual disarray. The sad part is with what you waste in unnecessary and undisciplined spending could be used to literally change your financial destiny and that of your family.
The solution is a budget. I am fully aware that a budget is "the dreaded B-word;” however, it is time for you to associate budgets with your financial freedom. Did you know that the vast majority millionaires are self made, and that most of them follow budgets? It is true. In fact, following a budget is one of the reasons they got wealthy in the first place. Over the course of the next few weeks, we will discuss (1) what is a budget, (2) the power of a budget, (3) where to put budgeted money, and much more. In short, a budget is part of the foundation to your financial success.
Part 1: Where did my money go?
Whether you make $40,000 per year or $400,000, you can still be broke. People constantly ask me questions about their finances, especially with regards to planning for retirement, getting out of debt, or saving for education. It always amazes how some people waste so much money and then wonder why they are broke. Sometimes my frustration shows through, and they feel it necessary to justify wasting money. By far, the worst justification is “I have worked so hard and earn enough money, so I deserve to have nice things.” The news flash is a lot of people work very hard, but working hard alone is not good rationale for being financially irresponsible.
Some people both figuratively and literally mortgage their and their family’s future so that they can have some toys. Although eventually those things we buy lose their luster once you add up their true costs, the damage is already done. Sadly, these toys eat up cash flow so badly that there is little left to save and invest. The implications of that last statement are tremendous. Even if you earn a million dollars a year, financial intelligence is not measured by how much you make but rather by how much you keep.
If you happen to be one of several people who spend several hundreds and even thousands of dollars that you cannot account for each month, listen up. Without a budget, you may easily fall prey to “thinking” that your finances are in order, while they remain in a state of perpetual disarray. The sad part is with what you waste in unnecessary and undisciplined spending could be used to literally change your financial destiny and that of your family.
The solution is a budget. I am fully aware that a budget is "the dreaded B-word;” however, it is time for you to associate budgets with your financial freedom. Did you know that the vast majority millionaires are self made, and that most of them follow budgets? It is true. In fact, following a budget is one of the reasons they got wealthy in the first place. Over the course of the next few weeks, we will discuss (1) what is a budget, (2) the power of a budget, (3) where to put budgeted money, and much more. In short, a budget is part of the foundation to your financial success.
Thursday Post: Are Homes A Good Investment?
Monday Post: Budget Series Part 2
Copyright 2008, Roshawn Watson, Pharm.D. All Rights Reserved.
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7 comments:
Welcome Back Roshawn... great idea on Budget series!
V
Thanks. It is good to be back.
I have been reading your blogs RSS feed for a while now - nice blog Shawn!
What made me to speak up are the golden words in this post "Financial intelligence is not measured by how much you make but rather by how much you keep"
I couldn't have put it any better myself! :)
I have to admit that I have a personal interest in reading your and other personal finance blogs for I have a personal finance blog myself. You can check out the series of personal finance posts I am writing from April 2nd to 15th - Top 14 things you should start doing immediately to get rich. You can find the first post at http://mmmoney.org/?p=49
I assure you that in my opinion a budget is one of the 14 most important things that help to make us rich!
Thanks for the great comment. I just checked your post top 14 things you should be doing immediately to get rich. I think you are doing a great job with your blog, and you are right on point with starting out with paying yourself first.
Thanks for subscribing and the positive feedback via comment. I will definitely continue to check out your blog.
Friendly Regards,
Shawn
Nice and great write-up you have on budgeting.
Lolu,
Thanks so much for the kind feedback. I really appreciate it!
Hi Shawn!
I used your opinion in my latest blog post Budgeting Your Money: Opinions From the Web . I'd be happy to hear more comments from you on this topic!
Thank you!
Best Regards,
Tania
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