Self-Assessment for Personal Financial Empowerment
Every individual has a financial goal that they are striving towards. As a society, we should not be falling into a consistent cycle of obtaining income and spending it, while ever so slowly itching towards your financial goals. All of society, particularly millennials, are susceptible to influence from everywhere in our lives and this is precisely why each and every one of us needs to assess ourselves financially in order to empower ourselves. I believe that this especially occurs among individuals who in an effort to fit in or stick out, whatever the case may be, and spend too much on materialistic goods without budgeting for them and they eventually come to regret their decisions. The earlier you realize that you should be taking periodic assessments of your finances, the faster you will be on the right track to attaining your financial goals.
The most important tool that you have at your disposal is budgeting. Budgeting is crucial and necessary, but most people do not do it because it becomes too tedious or they cannot keep up with their budget. The most important part about budgeting is to be realistic and aim to maintain your budget! To get started, you can either set up a Microsoft Excel spreadsheet or write your budget on paper. We have outlined four specific steps that you can take to form a basic monthly budget:
- You’ll start with your anticipated income over the next month, if you have multiple income streams you must combine them together.
- Then, you’ll keep a log of all your necessary expenses, which is fairly easy to calculate. This includes your rent, gas and ordinary car expenses, food, etc. Essentially anything that you anticipate to pay for the following month.
- The next section of your budget will include the expenses that are not guaranteed, we will call these ‘variable expenses’, at this point you will provide an estimate of what you expect to spend. The estimate should be reasonable based on your personality as your goal is to maintain it. For this section, you will include any clothing expenses, entertainment expenses, unanticipated expenses (e.g. car repairs) and any other expenses that you personally may expect to have.
- Now, you will have the majority of your expenses out of the way, and the beautiful thing about a budget is that it keeps you on track to maintain your financial goals. After your expenses are budgeted for and paid off, the remaining income you have at the end of the month should go into your bank account, preferably in the form of a savings account. With your budget, you will be able to set realistic goals for yourself financially, whether it is to save money to start a business, to investment and let your money work for you, or whatever the case may be. It is important to set specific goals for yourself as this will provide you something to work towards and encourage you to maintain your budget.
Scientists say that it takes 21 days to build a habit, so budgeting may become second nature to you within 3 weeks’ time if you were to develop a budget and put an effort in daily to maintain it.
You may also be interested in: Alternative Money Savings Strategies for 2018
Writer: Ali Hussain
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