Tuesday, April 22, 2008

Financial Advisor: Personal Budgeting Strategies

Financial Freedom Mini Series: Lesson 2 - Part 2

In our last lesson I wrote about living within your means. Today I want to give you some more practical financial advisor tips that should help reinforce the previous lessons and also build upon them.

In order to achieve financial freedom we must live within our means and be take control of our personal finances through personal budgeting strategies. In order to do this we must track our income and expenses through personal finance budgeting. The first step in financial freedom - living within your means - is done by tracking our income and being sure to spend less money than we bring in.

Tracking income and expenses and preparing a personal finance budget is the easy part. The difficulty comes in sticking to your personal finance budget and continuing to track your personal finances on a daily basis. For most people this is very hard to do once we get caught up in the rush of daily life. In order to be successful we need to set up a personal budgeting strategie that allow us a planned time each day to keep our personal finance budgeting tracking up to date.

If you are reading this and wondering what a personal finance budget is or what living within your means is then I suggest you check out my previous posts. These will get you up to speed on the building blocks to financial freedom and then this post will make more sense to you.

Now, finally onto today's lesson. Today I want to give you all some practical real life personal finance advising tips and personal budgeting strategies that will help you stick to your personal finance budget and live within your means.

1) Take control of your spending- The most important thing in personal budgeting is to establish personal budgeting strategies that allow youto control your spending. Americans savings rate has dropped from 11% in the 1980's to a negative savings rate today. This is certainly not the way to live within your means and achieve financial freedom. You need to take control of your spending and be sure to only spend money that you actually have. This means absolutely NO CREDIT CARD DEBIT. Using a credit card is perfectly fine but only to the extent that you can pay off the full balance every month. As of today the average American has roughly $7000 in annual consumer debit. That averages out to an astounding $583 per month. You must give up on the debit and begin to stick to your Personal budgeting plan or you will never succeed in achieving financial freedom.

2) Be Organized- To achieve financial freedom we all must be organized. Without organization there is no way we can possibly track our income and expenses and stick to our personal finance budgeting plan. We need to keep receipts from all purchases and then add them to our personal finance budget on a weekly, if not daily basis. This is a very important personal budgeting strategy.

3) Hire a Personal Financial Advisor- The average personal does not have enough financial knowledge to properly use their money to have it work for them. For these people the smartest thing to do is hire a personal financial advisor. This person can help you to set up your personal budgeting, stick to your personal finance budgeting, help you with investment decisions, and even give you advice about the potential large purchases you are considering. There are also many other things a personal financial advisor can help you with, basically anything you can think of that has to do with money. The end result of sticking with a financial advisor should be financial freedom at some point.

4) Set Goals- Setting personal finance goals for your future is very important. If you can set goals for your future then it can help you stay on track right now. Seeing what the payoff will be at the end often helps people to stick to their personal finance budgeting strategies.

5) Cut the Unnecessary Expenses- In order to achieve financial freedom we need to live somewhat frugally today. Living frugally today will payoff and you will be much for financially free in the future because of it. We all have those unnecessary expenses that we can cut from our personal finance budget. All it takes is small things like packing a lunch for work instead of eating out.

OK, now I am going to get more specific with little everyday tips.

1) Buy Store Brands When Possible- You will be surprised at how much money this helps you save. Finding small money savings tips like this one will help you out significantly in sticking with your personal finance budgeting and will have you on your way to financial freedom.

2) Don't Eat Out So Often- Besides being extremely unhealthy eating out is also very expensive. If you could cut your eating out to 1-2 times a week instead of 4-5 then you could save $150-$200 per month. That would equal an extra $2400 per year. This is once again another way to cut out small expenses and help yourself stay within your personal budgeting plan and within your means.

3) Never Buy a Brand New Car- When you buy a new car for $25,000 it is instantly worth $18,000 once driven off the dealers lot. Buying new cars and getting a car loan will put you years and years behind in your quest for financial freedom. A new car should never be bought because it is to large of an investment into something that is simply going to lose value very quickly with each use.

4) Use Coupons and Stock Up on Sale Items- This can help you pinch those pennies and save money on groceries. Once again, another way to save money and be on your way tofinancial freedom.

I think you can see from my posts today that pinching pennies is the most important thing in achieving financial freedom and sticking to your personal budgeting plan.

Its not that you have to live like a poor person but instead you need to cut out the unnecessary expenses. Most people don't realize how much these add up to each day and each month. If you can follow all of the tips above I can promise that you will save at least $300-$400 each month. And maybe more depending on your circumstances.

Financial freedom is a great thing to experience but it definitely takes sacrifice for today in order to have that freedom tomorrow. If you can stick with personal finance budgeting and follow the personal budgeting strategies I have suggest I guarantee that you will be on your way to taking control of your personal finances.


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