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It's tough being a first-time buyer in today's housing market. Don't make it even harder (or more expensive) for yourself by making these common mistakes.
What is a Budget?
Budgeting may not be as exciting as getting a canary yellow diamond, traveling to an exotic island, climbing Mount Everest or driving a sports car. But it is much more rewarding. Budgeting is important because it helps you navigate the seas of financial turbulence.
One of the main why people unsuccessfully maintain a budget is their lack belief about its importance. If you believe that maintaining strict spending habits is an unpleasant sacrifice, then you are likely to fail at budgeting. On the other hand, if you believe that maintaining strict spending habits helps you achieve your financial goals, objectives and dreams, then you are likely to be effective. Understand that while budgeting may seem like a sacrifice, you are more likely to reach your ultimate goals if you stick to them.To increase you chances of successful budgeting, work on your belief system.
It is impossible to avoid the thoughts that come into your mind. However, it is reasonable to believe that you can control what stays in your mind. Maintaining the belief that budgeting is negative is a surefire way to fail at the process.
Many people refuse to budget because they believe that the very act is negative, hard and/or uncomfortable. If you believe this way, think of budgeting as a “money management plan” instead of a “budget.” Money management is much more palatable than budgeting because the management process ensures you have productive spending habits. This helps you believe that you can do what you want, get what you want and achieve your ultimate aim only if you manage the process effectively over a period of time.Why is budgeting important?
Everyone knows that it is impossible to live without money. Having the right perspective on money is critically important, however. Guns, hammers, cars and knives are all tools. Using them as they were intended can assure you that you will be successful. However, using them in a way that they were not intended to be used can cause great harm.
Money is but a tool that is used to help you reach your life’s goals, objectives and dreams. Ineffectively managing your money can be harmful to you over the long-run. On the other hand, managing your money effectively will allow you to succeed. Therefore, you must know the true purpose of money and how to use it to effectively reach your ultimate aim. Budgets or “money management plans” show you how you spend your money and establishes a long-range plan that helps you save for the things that are important to you: a new house, a new car, an exotic vacation, a comfortable retirement, a college education for your children, an inheritance for your children and grandchildren or whatever your dreams may be.
If you have found yourself in a financial bind because your money is gone before the month ends, now is the time for you to establish a budget. Establishing a budget is very important because it helps you to live within your means and plan for the future. It also operates as a motivational tool to help you achieve your financial goals and desires in life.What should you budget include?
Budgets have common features, but should be customized to fit your needs. It is impossible to stick to a generic, uninspiring budget. You must use common budget categories, but your actual budget must reflect your personality, lifestyle and inspiration. A surefire way to be ineffective at budgeting is to force yourself to adhere to a budget percentage that does not fit. Some may say that you should spend this percentage of your money on this category and that percentage on another category. The normal person will find this restrictive and will fall off the budget wagon in a few short days.
You should use the general budget categories that are described in the Budgeting Classroom. However, the amount of money allotted to each category should be personalized based on what you deem important. It is easy to lose your budget commitment. Doing things the way others suggest will certainly lead to failure. Therefore, stay motivated by budgeting based on your individual interests.