Financial planning and budgeting are important to your personal finance or business finance, if you are a business owner. It is particularly important when there is a recession. However, you should not wait for a recession to happen before you create a financial plan and budget. By then, it will be too stressful to think about executing it.
A recession is when the economy is slow over an extended period of time. During such times, people lose their jobs and find it hard to make ends meet, let alone to even think about a budget or financial plan. If you own a business, it is ideal to understand and be aware of how your business is doing in the existing market and the kind of expenses you should be prepared for. A slow economy will always affect your business, more so when you are unprepared.
With the ease of acquiring credit cards, loans and retail store cards, it is also easier to get into debt faster. You must know where your money is going and plan for a rainy day. Don’t use a credit card to repay another debt or bill. You will always have revolving debt. You should think about saving, even though, for some people, this might seem as if it cannot be attained – since they are already drowning in debt.
To get on the path to being financially responsible, you should begin by writing down all your debts and comparing it with your income. If you are bringing in less money than you spend, you are in big trouble. When you have a good idea of your income and expenses, it will give you more impetus to budget and plan so that you don’t live beyond your means. When you are aware of what you are earning and spending, you have the opportunity to fix it before it gets out of hand. You will be able to reduce your debt and possibly make some changes to your living expenses, eliminating things that you really do not need.
Elimination of Specific Expenses
Free up some of the money you are spending on things like coffee every morning on your way to work. Bring your lunch to work instead of going to a restaurant everyday with your coworkers. Instead of driving to work every day, avoid spending so much money on petrol by riding with a friend and giving a few extra dollars. You can alternate by doing the same thing for your friend a couple of days out of the week.
Force yourself to save, even if you have to give permission on your job for automatic withdrawal from your paycheck to your bank account. When you get into the habit of saving, it allows you to be able to plan for the future and budget to have money to put into your savings account. If you are not able to have automatic withdrawal due to all your debt, get a piggy bank and put the loose change or dollar bills that you may find yourself with each week. It can really add up.
It is best to start planning and budgeting financially. Don’t wait until something happens. Be prepared today for your upcoming future.