WELCOME GORDON BENNET BLEIL
GORDON BENNET BLEIL
Gordon Bennett Bleil is a financial educator, former banker, bank consultant, entrepreneur, business executive and business owner. He has been a professor teaching in MBA programs and he holds an MBA in finance from the University of Southern California. Gordon hosted a radio show in finance entitled The Path to Financial Freedom and has authored courses in personal financial management. He is renowned for his ability to present complicated material so that it becomes simple and understandable.
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The mere mention of the word “budget” causes stress and anxiety in some people analogous to telling them that they would have to go to the dentist. For some reason any mention of managing your money seems to be intimidating. Maybe it’s because so many books approach budgeting as a rigorous and intimidating process.
But it doesn’t need to be that way at all. A budget is simply a spending plan to let you stay in control of your finances. If it is done correctly it can be an invaluable aid to help you meet your goals. A budget should be useful and flexible so that you will continue to see is a benefit rather than an impediment.
There are essentially six steps to preparing a good budget. Let’s explore them.
Step 1— Decide why you want a budget.
If you do not know why you need a budget it is useless to try to make one. Many people make their first budget when they find out they are spending more than they are making and need to fix it. Others want to save more for retirement. Whatever it is you simply need a goal before you start budgeting.
Step 2 — Gather data
You need to know what you are spending now and for what you were using your money. This is often the toughest part of the budgeting process. If you asked most people to reconstruct from memory what they spent the last month they would unlikely get closer than about 80%.
The importance of this cannot be over emphasized. One of the reasons for a budget is to identify money that is being wasted or spent unnecessarily. Money is very liquid so we may draw a parallel to water in a bucket. If the bucket has a hole all of the contents will certainly leak out. We want to keep that from happening.
So for one month count every penny you spend. Then at the end of the month add pro rata amounts for any expenditures which do not occur evenly each month. Be especially careful with charge cards that you do not add the amount of the primary transaction and the amount on the credit card. If you do you will be double counting.
When this is done you should have a pretty accurate idea of where your money is going. You may have some surprises. At one money management seminar a lady who did this discovered she was spending $1700 a year in the company vending machines. Now there is nothing immoral in this but maybe it is not the best way to spend your money. Maybe she wanted to make some changes.
Step 3 — Organize the data
Raw data is not very useful. So we have to organize it into categories. There are mandatory expenses, discretionary expenses, hybrid expenses, and escrowed ones.
Mandatory expenses are those which have to be paid before anything else can be paid. The mortgage payment is an example.
Discretionary expenses are those which can be suspended for an indefinite or short period of time. An example would be going to the movies.
Hybrid expenses are those which have characteristics of each of the previous two. An example is the grocery bill. Some of the grocery bill is mandatory and some of it is discretionary.
Escrow expenses are monies which you set aside for bills that do not occur evenly throughout the year. An example would be your property taxes.
Now record the data into these categories. It is a good idea to record this information on columned paper with three columns so that you can make changes.
Step 4 — Analyze the data and propose changes
Now it is time to look at the data in some detail. For each item determine what you spent and what you would like to spend and put the amount in parallel columns. Then determine whether the amount has to go up or down. Maybe you want to put more money into retirement and less money into eating out.
Obviously the amount of money going out has to equal the amount of money coming in. If part of the money coming in is increased indebtedness you may want to consider correcting that. Someday increased debt has to be paid back and that will increase still another category.
Step 5 — Calculate all of the changes you want to make
For all of the expense items simply determine any changes that you have to make.
Step 6 — Put your spending plan (budget) to work for you
How you do this is completely up to you. A few tips may help you out. Money for different purposes should be handled differently. Wherever possible mandatory expenses should be set up as an automatic debit to a checking account. Money for different purposes should also be physically separated. It can be in different bank accounts, or it could be an envelope system.
The envelope system works very well. You simply put the allocated amount of money for each category in a separate envelope. When the money is gone you stop spending. This way it keeps you from overspending for something you had not planned to do. Escrow money should not be mixed with the grocery or entertainment funds.
There are many sites on the Internet which can give you additional specifics on budgeting and systems to do so. All of the forms necessary for a budget can be downloaded free from the author’s website www.ptff.net. Another thing that may be of interest to you is the Financial Freedom Risk Assessment quiz that can also be found on that web site.
ABOUT THE BOOK
Give Yourself a Raise is a complete how-to guide for finding more money to reduce the stress in your life and lead you to financial freedom. Suitable for beginners and professionals alike, it will lead you to more contentment about money!Unique to this book are:· Financial Freedom Risk Assessment Quiz—take it and evaluate your own risk!· Goals made easy—the complete foundation for personal money management· Freedom Money Management System™—harness the power of electronic banking to organize your personal financesYou will also learn how to:· Control impulse spending· Eliminate family conflict· Get out of debt and stay out· Practice spending strategies to stretch your income· Stop wasting money
Categories: Personal Finance-Budgeting, Personal Finance-Money Management
Paperback: 250 pages
Publisher: Elate Press
Publication Date: July 23, 2013
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