Budget for Success and Predict the Future!

It has been said that there is freedom in order, and disarray in chaos. That can be seen nowhere more evident than when it comes to personal finance. Basic Budgeting and Projection skills are the difference between positive and concrete wealth building, and spiraling into poverty. This article (as part of a five- part introductory masterclass) will introduce you to these concepts and help you project yourself into the future!

What is it and Why is it important?

Before we get into advanced techniques like projecting, we need to get comfortable with creating a budget, and learning how to use it.  The term Budget is defined as an estimate of income and expenditure for a set period of time. Put in layman’s terms it’s a system created by tallying up what you spend, and then putting that against what you make.  Creating this system will give you a way to monitor your finances and allow you to make micro-adjustments to fit your changing goals.

Counting Coins

To create a simple budget, take out a pencil and paper and label two categories: wants and needs. In the needs category list out every reoccurring bill and subscription that renews at least once a month. This includes things like groceries and transportation fees. Also consider an amount you can set aside for entertainment. Next, list any way that you make money in a stable fashion. This includes weekly or bi-weekly wages, assets like rental property, or committed side hustles.  Thirdly, list your wants both immediate and future. This will allow you to put everything into perspective as you move forward.

 Finally, tally everything up and compare how much money you spend, to how much money you earn. If you’ve done everything correctly then congratulations! You have made your first budget! You have taken a very big step in financial literacy and financial stability. If this step has given you trouble, or you want to confirm you’ve done it correctly, please look at the examples below to get a sense of what yours should look like.

Things to keep in mind

Creating a budget can be super simple, provided you approach it the right way. Here’s some tips to make sure you create a system that can grow and change as you set goals and create more complex strategies:

  • When creating a budget you have to consider your wants AND your needs
  • At first you may be tempted to not include entertainment as a part of the budget, which is a mistake. No one can live without some form of entertainment, and making a strict budget without room for things like these can create resentment for your budget.
  • Allow yourself room to change: if you know that you don’t plan on working 60 hours for the rest of your life, don’t budget for it.
  • Consider quality of life: While you may at first be tempted to live off  bread crusts , each cut in expenses may drastically affect your day to day.
  • Be honest with yourself: If you know you don’t need to spend extra money on something, consider cutting it if it doesn’t detract from your quality of life.

What can I do with it?

Now that you’ve created a budget we can talk about the many benefits that come with being able to see your finances on paper. You may have already began to see some places where you need to tighten up, as well as some places where you are doing better than you thought you were. You should also be able to see if you are living above or below your means. Regardless of the outcome, you can now judge your finances as a complete picture. We can now start on the next step in our journey of finance: projection.

Predicting the Future

Projections, when it comes to Budgeting, is exactly what it sounds like: making an estimate time of arrival to a goal, based on how you handle your finances. As seen in the example above, Adam is able to save 100 dollars a month after all his bills are paid. If his goal is to buy something worth 600 dollars, then Adam knows it will take him 6 months to reach his goal. Knowing that, if he starts in January, then he knows he can achieve his goal by June. That level of certainty is the beauty of projection, and can be used a bunch of different ways.

Getting Creative

Now that we understand basic budgeting and projection, how does that help you as a creative? For that answer let’s look again back to Adam. Let’s say Adam has found success in a Print on demand business where he sells his custom designs. Let’s say he wants to invest in his business and buy a printing system so he can make better products. His current business makes him 300 dollars profit. If the system he wants costs 2100, then he knows he can scale his business in 6 months and plan his business strategy accordingly.

Or depending on his tolerance for risk, he may decide to take out a loan for 2100, and buy the system now. Having a financial plan may allow him to see that he can make a greater return by being able to put out more product, thus increasing his profit. If this move doubled his profit, then he could project that he would achieve the same goal this way, in 3 months instead of 6. Having a financial plan, like a budget, and being able to make projections based on it, gives creative entrepreneurs options they wouldn’t otherwise have.

In Conclusion

In conclusion, if you want to make sure you are going the right way in your journey, you’re going to need a map. Creating a budget and learning how to use it, will give you the tools you need to not only make a map to financial stability, but also make a map to whatever goals you set in your future. Learning how to project using that budget will let you know how long it will take to get to your destination, or give you options to alternate routes.

Understanding your options financially is one of the most important steps to obtaining financially freedom. Take your time to become familiar with the mechanics of budgeting, and learn how to make budgets that accommodate your wants and needs. Making a budget that you can stick to is far more important, than making one that achieves a desired result at the cost of your mental and physical health. Wherever your map takes you, as long as learn from your mistakes, and take your time, you will eventually reach your destination of success!

Was this article helpful? Was it insightful or did it give you some new ideas? If it did please bookmark this page whenever you need a refresher and consider reading our other articles for more motivation, inspiration, and all the things in between! Also consider letting us know what you thought of the article on our socials Facebook, Instagram, Twitter. Remember, Create Boldly…because you Matter!

Ready to continue? Please visit this next article to learn all about accountability, support systems, and self-control when it comes to your finances!

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