Financial freedom no matter how much money you make!
You do not need to be rich to achieve financial freedom.
Financial freedom is simply living debt free and organizing
your money so that when the bills are due, you have the
money set aside to pay them.
About two years ago I realize that each and every month I
was going a little further into debt. I decided it was
about time to do something about it, so I went to a
financial seminar sponsored by my local church. This
seminar was pretty much what I expected, they reviewed
basic principles for handling money properly, avoiding
credit cards, being careful when purchasing a vehicle, and
living on a budget.
The approach that was used when discussing the budget topic
is what changed my financial life forever. The word
"budget" has such a negative connotation for most people
that it is an instant turnoff.
Most people believe that a budget is for people who don't
have much money, and it also tends to make people feel
restricted in their spending. Nothing could be further from
the truth!
A budget is simply a spending plan. Most people like to
spend money, so let's use the word "spending plan" and
leave the word "budget" behind us.
A properly used spending plan will provide a person or
family (with even a modest income) a true sense of
financial freedom. I am experiencing an awesome sense of
freedom myself since I have put my own spending plan into
place about two years ago.
What I am talking about is this sense of freedom that you
get when the mortgage comes due and you have the money
already set aside; when the kids have to go back to school
shopping and the money is there waiting; when you go
grocery shopping each week and you know exactly how much
money you can afford to spend because the money is already
set aside!
When we took one of our cars in for inspection, we were
told that it needed new tires. No problem! I had an
automobile maintenance fund set aside and we had just
enough money to cover not only the inspection, but a nice
new set of high-quality tires, all because we implemented a
spending plan with the help of some very powerful, yet easy
to use software!
I cannot tell you what a wonderful feeling it is to have
money set aside for just about anything and everything that
comes up!
An effective spending plan can be created by simply looking
at the money you have spent over the past year or so and
getting an estimate as to how much money you spend in each
area of your life. Then looking at your income and getting
an idea of how much money you would need to put aside for
each category for the coming year. If you have not been
keeping track of where your money goes, simply start now by
keeping a general record of where you spend your money.
This article will not go into too much detail about how to
do this, but I will give you an overview.
Sit down with your checkbook and make a list of all things
you spend money on. Then create 10-15 categories that all
those expenses would fit into.
An example would be:
Housing (mortgage, utilities, repairs, insurance,
furnishings, etc.)
Automobile (payments, gasoline, maintenance, insurance,
etc.)
Food (weekly groceries)
Entertainment (dining out, movies, golf outings, etc.)
Savings (investments, savings accounts, college fund, etc.)
Vacation (ALL vacation expenses including travel, dog
sitter, etc.)
Debt (credit cards, loans)
Miscellaneous (pretty much anything that does not fall
directly under any other category)
Charitable donations (tithing, other tax-deductible
donations)
Christmas (nothing is more awesome than not having to worry
about how you're going to pay for all those gifts!)
Once you have listed all your expected expenses into one of
the categories, you'll have to figure out how much money
from each paycheck you need to put toward each category.
For each category you'll have an envelope.
Right about now you are probably thinking, "Is this guy
nuts? Nobody uses cash anymore, and nobody keeps cash in
envelopes!" This is where software comes into play. There
are software programs available that will enable you to
have "virtual" envelopes to keep track of your money, which
is safely tucked away in your checking and savings
accounts. I am not talking about a simple Excel
spreadsheet or anything of that sort, I'm talking about
extremely powerful software (much better than MS Money or
Quicken) that can generate reports, track all of your
expenses,pay your bills online in seconds, make tax time a
breeze, automatically place the proper amount of money in
each envelope, and get you on the highway to financial
freedom.
It is probably best start out with a relatively small
number of categories. As you become familiar with your
spending plan you can expand the number of categories. For
example you may want your housing category to include all
the monthly bills associated with your home, or you may
want to have a separate category for mortgage payments,
utilities, homeowners insurance, taxes, etc. You may want
to add more categories such as taxes, birthday parties,
medical bills, hobbies, allowances, unexpected expenses,
etc..
It may take a little bit of time to set up your spending
plan, but once it is set up, it takes very little effort to
keep it in place. You won't do it perfectly the first
time, you will have to make adjustments as time goes on
because unless you are extremely lucky, you'll find out you
had too much money set aside in some categories and too
little in others. You can always change your spending plan
as your situation changes, your income changes, or your
spending categories change.
This may sound like a lot of work, but the concept is
simple, and the software will guide you through step by
step. Very soon, you will have total control of your money,
and will know what true financial freedom feels like!
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David Monyer normally writes articles on Health and
Fitness, but has found a powerful tool for Financial
Freedom. Try the same software for FREE by visiting:
http://www.RockSolidBodybuilding.com/mvelopes
