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The Most Important Tool in Finance

Most Important Tool in Finance

Millions and millions of Americans are living paycheck to paycheck, trying to make ends meet. Trust me, I realize that breaking that cycle can seem like a tall order. Whatever your monetary goals may be, there is one simple tool you can start using today that will help you finally take control of your financial destiny. The best thing about this tool is that it will cost you nothing, aside from a little time every month to set it up and track it. If you haven’t quite been picking up what I’ve been putting down up to this point, get ready to squirm (that is most people’s almost instinctual reaction to this subject, after all) I’m referring to a budget. I’m not talking about a vague idea of how much money you have, and how much you think you’ll need to survive this month. I’m talking about an honest to goodness budget; that you stick to, that you keep track of, and that you update when need be. Budgets take away the guesswork on how much money you THINK you have, and starts allowing you to make decisions based on the money you KNOW you have. Keep these steps in mind whenever building your budget:


  1. Do Your Research: Look at your bank statements from the past few months. Calculate how much you have been spending on things like food, fuel, rent, car notes, etc. Make note of how many of those purchases were things you needed vs things that you wanted at the time. You’ll have to make some short-term sacrifices to reap the long-term benefits.
  2. Be Realistic: Use the calculations you made on your previous few months’ spending habits and create a realistic budget that you believe you’ll be able to adhere to. If you have been spending $500 a month on food, don’t expect to slash your costs in half. It’s always better to give yourself a little bit more wiggle room and not spend everything, then to aim low and be disappointed right off the bat.
  3. Zero-sum game: When you receive your paycheck, you need to assign a destination for every last penny. You shouldn’t have any loose cash floating around. If you don’t spend all the money you expected to this month, you can always find a spot for it in next month’s budget. Also, it’s perfectly acceptable to create a small “miscellaneous expenses budget” each month, for any unforeseen purchases.
  4. Cater To Your Strengths: If you are technologically savvy and would like to build your budget into a spreadsheet, by all means do it. If you would rather pull out the old legal pad and a pencil, do it. If chisel and stone is more your thing, be my guest. Don’t let the relatively small task of tracking your spending turn into a big pain.
  5. Be Consistent: Set aside a time of day, everyday, to review that day’s spending. Update your budget with the new numbers. Even when you don’t feel like updating that day, make yourself do it. This lifestyle will become a lot easier if you can turn it into a habit instead of an imposition.


Once you begin to budget your money, you will discover that your bank account is no longer in charge, you are. Eventually, you’ll be able to not only budget for the things you need, but also a few things you want!

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