by Jaynee Sasso
The New Year has arrived and now is the time to chart your course for moving to the next level of prosperity. We all have a personal responsibility to bring about change in our financial lives. Change starts within you, not with the public policy created and enforced by governmental agencies. In order to initiate change, you must learn how to effectively manage your personal economy. For just a moment forget about rising gas prices, high unemployment rates and a depreciating housing market. Instead, let’s focus on getting back to the basics of money management and exploring how to best use the resources we already possess. Far too often people use the economic downturn as an excuse to lead irresponsible lives. However, if we want to excel in both good and bad times, we must be committed to pursuing financial success daily. Implementing an effective spending plan is one way to ensure future success.
Most people feel that if they could just get the “right” job or get their hands on enough money, all their financial problems would be solved. You already hold a top executive position: Chief Financial Officer of your home. In the business world, executives get paid according to how well they lead, which is measured by the overall performance of their company. If you ever wanted to be the CFO of your own company, today is your first day on the job. Start treating your personal finances as a business and develop a clear vision for where you want to take your company. A budget is your main tool to measure monthly progress and success.
The first step is to examine your spending habits. For the next 30 days, track each dollar you spend. Knowing where you currently spend will allow you to give purpose to every dollar that comes into your hands.
Now, establish boundaries and follow them. A budget is only effective if you choose to respect its boundaries. An effective budget plan answers the following questions:
- What savings goal do I expect to achieve for the current month?
- What bills should I pay?
- How much can I pay?
- When do I expect to make a payment?
- Where is the money going to come from to make the payment?
Set pre-determined spending guidelines and challenge yourself to develop a strategy to overcome obstacles to saving. Typically, people put together a budget that simply takes their income and deducts a laundry list of expenses. But an effective budget will cause you to think, plan, and strategize your way to the next level of success one month at a time.
As the CFO of your family, it is your responsibility to develop a financial blueprint for success. Making the decision to implement an effective spending plan is a great way to start.