subject: Before You Work Out Your Budget, There Are A Few Things You Need To Consider... by:Reuben Denysschen [print this page] One of the most basic, yet least discussed or applied processes of personal finance and financial management is that of prioritizing. Before getting to the important issue of budgeting, it is essential to sit down and asses your priorities.
The first thing to do is to focus your objectives. You will, in all likelihood, not achieve every financial goal or dream you've set for yourself. There is, after all, only one Warren Buffet and one Bill Gates... So it is important to identify your financial goals clearly and determine why they are matter to you. You will also need to decide which ones are the most important, as there will be times when you'll have to choose between them. By concentrating your efforts you'll have a much better chance of succeeding.
You will have to prioritize your goals and determine which ones you want to accomplish first, and which ones can wait until a later time.
The younger or sooner you start, the better. Money put in interest-earning accounts or bonds and stocks appreciate in value and compound. The more time you have on you side, the greater your chance of success. People with more time can generally take more risks and so possibly get greater return.
The hardest lessons in life come with great regret. Not educating yourself about financial things, wasting money, and not starting to save and invest when you're young ranks high on the list of regrets older people have.
Take the time to sit down and carefully think about what you want to achieve financially in your lifetime, and how you plan on achieving it. Remember important things like buying a home (or two...), the kids college education, an emergency fund, retirement, and anything else that will make you happy, fulfilled, or feel financially secure.
Involving your partner is also important, as you will both need to be on the same page when it comes to spending and budgeting. It will help you with disciplined spending if you know you are accountable to your partner for how, when, where, and on what you spend money.
It is worth noting that things might change as you progress. Your priorities may not always stay the same, and that's fine. But don't fail to establish new priorities and stick to the ones you've decided on at that time.
Don't neglect this crucial first step of considering your priorities before you set up a budget.
About the author
Reuben authors numerous blogs on a variety of topics. His main interest is personal finance and wealth creation. For more information on budgeting and personal finance visit http://makelotsmoremoney.blogspot.com/
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