LIFE

Budgeting: What is it?

If you're going to be successful at reaching your short, medium and long-term goals, you'll need directions. And that's called a budget. Creating a budget is like creating a financial roadmap—it's going to take you from where you're sitting right now to millionaire-land.

A budget is a tool to help you live within your means. It's a snapshot of all the money that comes in (income) and all the money that goes out (expenses). You determine ahead of time how much you're going to spend in categories such as clothing, transportation, entertainment, etc. As the money comes and goes, refer to your budget to see how you're doing with each category.  

This is where the importance of PYF comes in. Remember PYF?

Pay Yourself First.

If you always leave your goal of saving to the very end, you'll likely not meet your goal—the temptation to spend is just too strong. But if you prioritize your savings like a bill that needs to be paid (to yourself) first, then you'll always meet your goals and the rest will fall into place.

Think of it as a game with a goal to stay within your budget, even if sometimes you'll have to make sacrifices. Think you can forgo that cool pair of shoes for another few months to make a million dollars? Thought so.....

TRY THIS

There are a lot of cool new budgeting apps to try. Check these out:
• You Need A Budget
• Mint Budgeting App
• PocketGuard
• Good Budget
• Mvelopes

Next up? Step-by-step guide on making your own budget. Follow our Financial Literacy Month series to get financially fit in just 30 days.

James McKenna and Jeannine Glista  are the co-creators of Biz Kid$, a national financial education initiative based on the award-winning public TV series. They also are the authors of the seriously smart new book How to Turn $100 into $1,000,000 (out this month from Workman Publishing, $13), which outlines in detail every step you need to take to make your million. 

by GL | 4/5/2016