Wise Accounts Blog

You have heard the expression "spending like a drunken sailor". The fact is that freedom requires some virtue to be managed. For the rest of us we need to set boundaries. That is just what a budget does.

You have heard a couple at the shopping mall arguing "We can't afford this!" so then, how do you set what's in and what's out? It all depends on your goals.

Your goals will determine your priorities in life. In order to reach each milestone along the way you will need resources - time and money. What hasn't been planned is left for a better day. What has been planned is negotiated for the best price/quality.

The danger of not having a budget is that you are being tossed about like a cork on the ocean. Whatever clamours the loudest will get your attention. Advertising is aimed at those who do not have a budget and can get enticed to change direction. They are being influence by the fashion of the moment and believe the lie that to be successful, loved and respected they need to buy the item advertised to gain all its instant benefits...

Sound like a fairytale, huh? Sadly a whole industry on Madison Avenue feeds on that lack of discipline.

So how do you make a budget? You have to monitor your spending pattern for say a month or so. Take all the expenses that went through your credit card(s) and your bank account(s) and sort them out by category: food, clothing, petrol, transport, eating-out, entertainment (movies, sport fixtures), insurance, phone/internet, utilities, rent, etc... Some expenses show up only yearly or quarterly. Then divide the yearly total by 12 for a monthly figure.

Then assign some priorities: One for things you can't do without: food, rent, transport. Two for nice to have things but where there is room to trim down. Three for things that really matter to you, like an overseas trip, some further education, some share trading or business capital.

The moment of reckoning comes when you line-up all your anticipated expenses with your current income. You can bet there will be too much month left at the end of the money.

Something will have to give. But now instead of being pushed along by whatever shines the brightest you are led by the decisions you have made and the goals you have set out to reach. The freedom of doing as you please with your money is not a matter of what feels good - it's a matter of what lines up with your goals and your budget.

Don't just wish for things. Make them happen. Wise Accounts is an online bookkeeping tool to manage your finances while Goal Setter is another online tool to document and track your progress towards your goals. Take advantage of these resources.

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