The Budget

The main pillar

I refer to a budget as one of the pillars of wealth building. In construction a pillar is referred to frequently as the structure that carries all the heavy loads, or in other words makes everything else in the project work correctly.

Visibility

I often encourage people to start all financial planning with a budget, and they frequently resist. Budgets are often thought of as bad things, things which make everyone unhappy.

But I tell people that without a budget, you are like a blind man in the forest.

You can’t find your way out of the Debt Jungle without a clear idea of where you are and where your going. A budget is really a combination of a map and a compass. It gives you visibility on where you are, and helps you not only chart your path to your destination, like a map. But it also provides instruction on the direction in which you should travel.

Facts and Reality

A budget is disliked because it is factual, and points out clearly to many people that their expenses exceed their income. And just like the often anticipated advice from your doctor to exercise and improve your diet for a longer, but more importantly enjoyable life. People anticipate that a budget will tell them to do things that they don’t want to do. A budget brings us face to face with our financial reality.

Friend or Foe

I often have to remind some of my patients, who don’t like my advice, that I am not the enemy, and we are both on the same team. Team live long and healthy life. A budget is nit your enemy or foe. A budget is on your team, it is your friend and a budget is all about helping you reach your goals.

A budget is about attaining your goals

A budget is your present and your future

A budget tells you what your financial status is now, the present, a synonym for a gift. It actually is a gift for many people because it is the gift of knowledge that helps you build the financial future you want to live. It is in its simplest form input and output. You record how much money comes into your household bank accounts and how much goes out.

An illustrative Metaphor or Story

If your output exceeds your input you are in the ocean but submerged in the water, holding your breath. If you don’t get your head above the water, you will drown and die, financially.

If your output equals your input, you are in the ocean with enough of your head out that you can breath air. But the first big wave will have you underwater, holding your breath, and in danger of dying.

If your input exceeds your output, you have enough of your head out of the water, that you can keep you head from being submerged by waves of a certain size. But any larger then that and you will be holding your breath under water again.

If your input exceeds your output, and you have two months expenses saved in an account, you are out of the water. It will take a big and recurrent series of waves to wash you off the beach and back into the water.

Your budget, your future

That sums up most people’s motivation for starting financial planning, and it starts with budgeting. Many who start financial planning are under water or just barely staying afloat. If that is you, a budget is your way out of the water. *It’s your tool to get on dry land, and in many ways it can be a lifesaver

Hive account@joefinance

Joe Finance is a husband and a father, that also just happens to be medical doctor, writer, teacher and lifelong student of finance. You can read his other articles on finance at the Leofinance Website. Please check the Links below,

Budget, one of the foundations of a wealth building.