It is often said that money does not make the world go round, but it sure gives everyone the stress and friction in matters that concern financing. However, with adequate knowledge and careful planning, you can do yourself a big favor for yourself when the future comes. This week, the Connect. Learn. Grow. (CLG) workshop focused on educating the international community on how to best manage their budget and personal finance. Our guest speaker, Ms. Sherrie Clayton from Personal Finance@Duke, taught the participants on how we could make informed financial decisions in our daily lives.
Participants were provided with financial management skills necessary to navigate life events that affect every day financial decisions. More often than not, sticking to your financial budget is similar to sticking to your New Yearâs resolution - it is hard, but not impossible. To get started with budgeting, one has to first identify the challenges to budgeting: tracking your budget, making your daily decisions, avoiding temptations and most importantly, sticking to it!
One positive aspect to having a budget is that it allows you to start planning for the future. We were told that there are five main steps one has to take in order to create a stable and realistic budget. The first step in creating a budget is to set your goal. What are you saving for? What is important to you? Every financial goal you set should be a SMART goal: Specific, Measurable, Achievable, Relevant and Time-Framed. After creating your goal, the next step is to identify your income. It is important to keep in mind that it is as crucial to know WHERE your money is coming from as it is know WHEN your money will be available for your disposal. The amount of your income will impact your budget, while the duration will impact your cash flow and access to your funds.
Participants were also taught how to identify expense items. It is important because it gives you a starting place to create your needs and desires, and it also shows your current spending habits. There are three categories to identify your expenses: Fixed Needs, Variable Needs and Wants. After identifying the categories for the expenses, what would be the best way to keep track of the numbers? The tracking method you choose must be user-friendly and something that you find easy enough to do. If you spend too much time on your budget, or use a method that is too complicated, you probably will not stick to it. Participants were advised to find a way to keep up with their budget, either through a spreadsheet, an online website, or a mobile application. It is important to find a method that suits you best, because you would have to commit to sticking to the budget in order to benefit in the long run.
The last step to maintaining a budget is to make adjustments to it from time to time. Should you go over the budget in a month, take a look at your categorized âneeds and wantsâ expenses again. To make adjustments, first look at your âwantsâ. Is there anything in your wants column that you can reduce? Remember that you do not want to completely eliminate your wants, but you can reduce them. However, if you have reduced your wants, but it is still not enough to cover your extra expenses for the month, then look at your variable needs. Finally, look at your fixed needs. Each month, you will have to make adjustments in order to reduce spending, reallocate expenses and reach financial goals.