Maurice Patane shares his advice on how to create realistic and achievable budget.
Whether you’re already retired or still in the planning stage, your objective is likely to be?to have enough money so that you don’t worry about it; financial freedom. For one person this could be $20,000 per annum, while for someone else $100,000 per annum might not be enough.
Everyone has a lifestyle to which they’ve become accustomed. We either want to maintain it or improve upon it, but we certainly don’t want it to go backwards. Taking the time to define the life which we wish to have helps us to understand how much money we will need in order to enjoy our retirement, and also to become inspired to do whatever it takes to achieve that lifestyle. Having a purpose provides both a focus and a link between the actions which you need to take today and your goals for the future.
Apart from thinking of your actual goal, consider the advantages and benefits which you are likely to enjoy as the result of achieving it. How will your life be better? The more reasons which you have, the greater the motivation to achieve your goal.
Bypassing the important first step of defining the life which we want simply creates frustration and a lack of control. We end up reacting to events rather than designing and implementing a financial plan.
A budget is simply a tool which provides the foundation for building a personal financial plan. Although it can often seem boring, having a budget triggers challenging conversations about the future. It also forces us to take the time to determine what is important to us and the sacrifices which we may need to make to reach our goals.
But here’s the thing; a budget doesn’t lock us into a situation. Instead, it provides a framework with which we can make future financial decisions.
Financially independent people didn’t become so and then decide to complete a budget. They developed a budget?and reviewed it periodically to make the appropriate changes required, informed by their changing circumstances.
Creating a workable budget requires us to begin with the facts: the money going in and out across a whole year. There are a few ways you can record this. You can set up an Excel spreadsheet, download?a budget planner or another planning app, or simply get a piece of paper to record the information. The Money Smart website, is a good start if you would like to download a budget planner.
This planner allows you to do things such as graph your spending and put it into various categories, so you know what's going where.
Maurice Patane has been a financial planner for over 25 years. His experience has shown him that many Australians are not living the lives they dream of or wish for, which is often due to poor financial decision-making. Maurice is dedicated to helping everyday Australians take control of their financial future, so that they no longer have to worry about money.
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