Personal Finance Categories for Simple Budgeting

If you’re interested in getting control of your financial life, you’ve probably already tried budgeting, you might even be using it to some success. However, one of the common issues people have when budgeting is that they can’t stick with it for a long period of time. When life starts to get complicated, it’s hard to stick with a budget consistently.

This can be changed if you simplify the personal finance categories which you’re using to create your budget. Let’s talk about how this is done…

The Basic Simple Personal Finance Categories

I’ve found that there are four basic personal finance categories that make it easy for you to budget your money. They are: personal expenses, giving, investing and reserves. When I say “reserves” I’m talking about money that you set aside for building an emergency fund, for making cash purchases instead of using credit cards or other means of borrowing money, and for special, but major activities.

Now, in order to use these personal finance categories effectively, it’s important that you order them according to what’s most important. For example, if your goal is to set up reserves for an emergency fund before you start investing or giving, then the reserve category is the first place to put your money. This means that before you pay your expenses, invest any money, or do any of your charitable giving, you put a designated amount of money away in the reserve account.

Now, personally I put them in the order of: giving, investing, savings and personal expenses…in that order. This is because of my priorities, but it’s important that you spend your money according to your priorities. The more you spend your money according to your priorities, the more control you’ll have over your financial life. That said, I suggest that you DON’T place personal expenses as your first category.

The reason for this is if you pay your expenses first, you’ll likely never get into the habit of investing or reserving money. Many people often say that they’ll start investing or setting aside something when they “get the money.” You and I both know that when you wait for the “right time” to do something the right time seems to never come. You just have to do it now and correct course as you go.

Getting Started With Your Personal Finance Categories

What is your most important priority when it comes to your financial planning? Is it saving money, getting out of debt, investing or something else? Write it down and make a commitment that you’re going to put 10% of your income into the category which is most important to you, and don’t falter. Get started on this today, and you’ll see how these simple personal finance categories can make your financial life easier.

Why You Must Have a Clear and Written Plan for Your Personal Finance Planning Success

Good personal finance planning will never happen as a result of managing your financial life by the urgency of the moment or by what is urgent instead of what is important. As you know, success at anything, especially in the effective management of money, requires you to be proactive consistently in your daily actions. In this article, we’ll be talking about how you can accomplish this starting right now by having a clearly written plan for your personal finance planning success.

Personal Finance Planning Made Simple

One of the primary differences between people who are successful with their personal finance planning and people who are not is that the successful people have a clear and written plan as to how they’re going to achieve their goals. Meanwhile, unsuccessful people assume that as long as the plan is in their head, that’s good enough. Many of us greatly underestimate how big of a difference it can make to simply write down your goals and a plan for accomplishing them.

If you’re reading this and assuming that something this simple can make a big difference, here’s what you owe it to yourself to start doing right now: sit down every night and write out a step-by-step plan for what you’re going to do the next day. Keep it simple, put things in order of priority and make sure that you take care of the things which require the most focus when you are the most focused, which is normally right after you get up in the morning.

Just do this for one week, and at the end of the week evaluate your progress and set out a goal for what you’re going to accomplish the next week. This will be more than enough time to convince you how much more focused and productive you can be by simply having a clearly written plan for how to manage your time and energy.

Staying Focused on the Big Picture by Being Focused in the Small Picture

After you’ve done this exercise for a week, sit down and map out a plan as to where you’re going to be financially in one year. Break this goal down into monthly, then weekly milestones, and finally into small actions which can be taken on a daily basis. This way, you can focus your energy on the small building blocks which will eventually make up your success over the period of the next year.

Too often, people don’t do and then find that at the end of the year, they are nowhere near where they want to be. You can set yourself apart from this majority by following the simple steps in this article and having a clear path towards achieving success in your personal finance planning.