Effective Financial Management is Hidden in the Details

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FionaPerry

FionaPerry

Fiona is a stay at home mum of 3 and a wife to a city banker.In her spare time (when not looking after the kids) she enjoys running, blogging and taking the digs for long walks.
FionaPerry

We’ve all heard of them and we know exactly what they are, but how many of us actually put into practice creating budgets? We often complain about the schooling system not really equipping us with practical tools and skills we’ll actually need just for our survival, but if we only took the time to even try and implement half of what we learned we’d perhaps all hold a different view.

I mean the basics of drawing up a budget make it a really simple process. What you do is just make a list of what you spend each month and then weigh that up against what you make. This will let you know if you’re running up debt or if you have some savings which you can put away more effectively for maximum growth, or indeed if you’re being really wasteful with your expenditure. So basically creating a budget forms part of the fundamentals of taking control of your finances so as to better manage them. Everything costs money and you don’t want to be wasteful in ways which you may not even be aware of.

The devil is in the detail — if you drill right down to what you spend each penny on then you’re well on your way to applying some of the wealth creation principles used by key players in the financial sector to perhaps create your own little portfolio of positively-growing financial assets. There’s an effective way to draw up a budget and zone-in on the details however, if better management of your money is indeed the end goal. Maybe you want to rebuild your credit record as well and you currently don’t know just where to start.

A period of three months is ideal to set the wheels into motion, during which time you don’t change anything about your spending and saving habits. Account for every single last penny you spend over three months and you’ll get a good idea of exactly how much your lifestyle costs and it’ll then begin to emerge where you could perhaps be wiser about your spending and what expenses you may not need. For example, are you being debited twice by the same company or financial service provider for two different services which they render to you, whereas you could have them debiting you just once to save on the associated bank charges? Is there perhaps some way you can consolidate your debt, maybe?

The three-month cycle is important because it also brings to light some of those extraordinary expenses which tend to pop up once in every three-month cycle, for some odd reason. If there has been one such extraordinary expense, this doesn’t make for grounds to eliminate that as unnecessary spending. While the next extraordinary expense you’ll have to contend with may not come in the exact same form as the previous one, it’s still an extraordinary expense nevertheless, which means there always has to be some money for such an event.

Otherwise wasteful expenditure can often be curbed through carefully scrutinising how you spend your money, which can then be turned into a surplus if you shift things around properly.

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Fiona is a stay at home mum of 3 and a wife to a city banker. In her spare time (when not looking after the kids) she enjoys running, blogging and taking the digs for long walks.

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