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| Why Creating a Budget is Essential |
You claim to be aware of where your money is going and don't require a detailed record to stay on top of things. I present this challenge to you. For a month, keep a record of every money you spend—I do mean every penny.
You'll be surprised at how much the little expenses add up to. Take the total amount you spent each month on one pointless purchase, double it by 12 to reflect the number of months in a year, and then multiply the sum by 5 to symbolize five years.
In just five years, you might have saved that much AND earned interest. That's precisely why we all require a budget, my friend.
We can achieve financial success if we can get control over the minor expenses that don't actually significant in the grand scheme of things.
Little things have a big impact. $10 is saved each week if you reduce your lunch expenditure from $5 per day to $3 per day on all workdays throughout a five-day workweek. $40 per month x 480 / year x 5 = $2400 if interest is added.
See what I mean? You still eat lunch every day, so it really IS the little things. Moreover, there was only one place you could cut costs without sacrificing a necessity. If you search for opportunities to save costs, there are plenty available.
Establish clear short- and long-term objectives. Here, there are no incorrect responses. It's significant, period, if it matters to you.
If you wish to be able to purchase a sports car, put money down for your children's college education, travel to Aruba, buy a house, etc. then that is your objective, and the reason you should start managing your finances right away.