Budgeting Your Money

These are some tips I liked from a recent book I read
by Rich Dad, Poor Dad

*Budgeting Your Money*

A BUDGET is a plan.
“Budget” is: A plan for the coordination of resources and expenditures.

Types of budgets:
A Budget Deficit. “Excess spending over income for a government, corporation, or individual.”
A Budget Surplus. “Excess of income over spending for a government, corporation, or individual.”

Budget deficit of an Individual: “Individuals who consistently spend more than they can earn will accumulate huge debts, which may ultimately force them to declare bankruptcy if the debt cannot be serviced.”

Budget surplus of an individual: “An individual with a budget surplus may choose to pay down debt or increase spending or investment.”

There are TWO Choices: Budget Deficit or Budget Surplus.

Budget Deficit is obtained by spending more than you can make.
The second choice is to plan for a Budget Surplus. Learning how to budget for a surplus is essential for achieving financial integrity.

Budget Tip # 1: A budget surplus is an expense. “You have to make a surplus an expense.” Example: Tithing, Saving, Investing should be an expense and should be the first things you pay with your income. (Paying yourself first)



Typical poor person’s priorities:
Priority # 1: Get a high-paying job.
Priority # 2: Make the mortgage and car payments.
Priority # 3: Pay bills on time.
Priority # 4: Save, tithe, and invest.
In other words, paying themselves first is their last priority.


Investing Your Money

Savings- Saving money to invest in gold and silver ETF’s (exchange-traded funds).
Saving money in a retail bank long enough to invest in the ETF’s is what’s recommended. This means saving to accumulate the funds to buy the gold and silver stocks or real estate. With the ETF’s you can liquidize your assets quicker when you need cash. The liquid assets are held by your stockbrokers in gold and silver certificates, not in cash at a retail bank, because the dollar continues to drop in value year after year. Holding cash, or savings, in gold and silver also hinders you from spending it.

Tithing- It’s important to give. “God does not need to receive, but humans need to give.” Also a reason for giving is to pay your most important partner-God. God is the best business partner you can ever have. He asks for 10 percent and lets you keep the other 90 percent. You know what happens if you stop paying your partners? They stop working with you. That’s why it’s important to tithe.

Budget tip # 2: The expense column is the crystal ball. “You can tell a person’s future by looking at what they spend their time and money on.” “Time and money are very important assets. Spend them wisely.”

Remember this: your asset column is your column. If you do not pay yourself first, no one else will. Through your everyday expenses you and God determine your financial future.

Budget tip # 3: My assets pay for my liabilities. Never say- “We can’t afford it.” Instead say- “How can we afford it?” In other words, your assets column pays for your liabilities. By paying yourself first (tithing, savings, investing) you acquire assets. With the cash flow from the assets, you can buy your luxury liabilities. If you want big luxuries, buy big assets.

Budget tip # 4: Spend to get rich. When times are tough most people cut back, or stop paying themselves first. This is the time to increase your income and to continue paying yourself first. For example, in the world of business, when a company’s sales begin to drop, one of the first things the accountants do is cut back on spending. And one of the first things they cut back on is spending on advertising and promotion. With less advertising and promotion, sales drop, and the problem gets worse.

Budgeting is a very important process to learn and be smart at. Take the process one day at a time. Positive things do happen, sometimes not over night, but they do happen. If you will sincerely work at creating a budget surplus, your life will become richer. That is what budgeting is all about- using what you have, even if what you have is no money, to make you better, stronger, and richer.