If you do not budget yourself, there is no way of achieving financial freedom. When you decide to budget yourself, you have to keep track of all your income from different sources and above all you keep a track on your expenses. Once you manage to keep track of your expenses, you become aware of how much you are spending on unnecessary things.
In the beginning when you start budgeting your expenses, it could be quite difficult and boring. However, once you realize the importance of budgeting, you automatically relish the idea of budgeting. You have to budget yourself in order to reach your financial goals. Come on, even big and small businesses do it.
When you decide to budget your expenses you will start controlling them. You will desist from spending money uselessly and you will even pay your bills on time to avoid being slapped with a late fee penalty. Budgeting will help to improve your credit rating as you will no longer be defaulting on your loan payments. You will also end up saving more money which you can divert to different investment vehicles to increase your net worth after a period of time.
So budgeting is important but first you need to start the budgeting process. List down all sources of your income. This includes salary, dividends, interests and rents from property owned by you. You can check out your recent tax return form to find out all the sources of your income if you are not sure what qualifies as income.
Once you finish doing this, prepare a list of your expenses. This will include items like grocery, mortgage, utility bills, transportation, credit card bills, house repairs, life insurance, entertainment and anything else you spend your money on.
Then figure out where you can cut down on unnecessary expenses and stick to that decision. You have to make sure that 10 percent of your gross income is always directed to your savings. If you do not start saving, you will not benefit from budgeting your expenses.
You can do a monthly budget and stick to it. It does require self discipline but the benefits are immense in the long run.