Budgeting is your way of planning how to spend your money.

It is simply balancing your expenses with your income. If they do not balance and you spend more than you make, you will have a problem. Many people do not realize that they spend more than they earn and slowly sink deeper into debt every year.

Budgeting ensures that you will always have enough money for your needs. You need to take care the needs first and then the wants! If you do not have enough money to do everything you would like to do, then you can use the planning process to prioritize your spending and focus your money on the things that are most important to you.

Ideally, this is the best season to plan for the New Year.  You can gather your expenditure done in 2022 and using this information you can plan for 2023.   In this way, you can easily forecast which months your finances may be tight and which ones you will have extra money. You can then look for ways to even out the highs and lows in your finances so that things can be more manageable, and stress-free.

A budget can help you build financial independence and freedom. A budget can set you on the right path to:

1)Achieve your financial goals – Planning and working toward an objective allows you to plan big purchases, such as houses and cars, without worrying. Sticking to your budget and putting money aside will bring you a step closer to achieving your financial goals.

2)Give you the confidence and peace of mind of knowing you are in control of your money – Giving direction to your money in a way to accomplish your financial goals sets you free to enjoy and make the most out of your life. Focus on things that matter to you such as raising a loving family and performing your best at work.

3)Spend within your means – An annual income of twenty thousand and an annual expenditure of nineteen thousand results in happiness. An annual income of twenty thousand and an annual expenditure of twenty-one thousand results in misery.

4)Analyze your spending habits – You will be surprised at how much you spend on essential things, like bills, rent/mortgage, and food, and on unnecessary things (I am sure you are aware of a few!!). Laying all of your expenses out clearly will help you plan better while identifying areas where you might be able to save some money. Changing your mobile phone contract or switching to a more affordable tariff with a new energy provider are just two areas where you can make some savings.

5)Stay aware of your savings and debts – Budgeting helps you stay on top of what you are spending but what about the money you are putting away or using to pay off debts? A good budget will keep you aware of when your debts will be paid off and identify when you may have additional money that you can redirect into savings or spend on an occasional treat.

6)Find your blind spots – Seeing your budget spread on a piece of paper, you are in an advantageous position to trace your areas of immediate action.  Numbers do not lie!

7)Build an emergency fund – It is always safe to expect the unexpected. If your boiler breaks in the middle of winter, or your oven stops working, you will want to make sure you have some money set aside to deal with it. Careful budgeting can help take the unexpected bills by making sure you have a “safety cushion” to fall back on when you need it the most. 

8)Save for retirement – You do not want to comprise your standard of living because you failed to save for your retirement years.  The time to save for retirement is when you are still working and earning income.   

9)Strengthen communication in the family– Budgeting is easier when there is open communication between everyone involved and your family lends their support for your efforts. Talking to your family when you need to tighten the purse strings not only ensures they are aware of financial constraints but also brings them in as part of the solution. Working together with honest and open communication is helpful when it comes to healthy spending.

10)Pass on your good financial practices to the younger generation – financial literacy is better understood and built from a young age.  So, don’t you wish to educate your children by leading by your practices?

And as Warren Buffett said:” It is not necessary to do extraordinary things to get extraordinary results.

Budgeting and planning for 2023 is easy.  All you need to do is contact me to guide you through the budgeting process.

Ellada Palmyri