Financial basics (Part 4)

Strat Here:

Part 1

Part 2

Part 3

To begin the journey to wealth creation, one needs to educate himself or herself about different financial concepts. These help to get on par with those who are ahead. The most benefit is it becomes easier to expand the knowledge as you engage with the content around finances. 

Budget - is a financial plan for a defined period of time. You plan how much you gonna get, how you gonna use it and how much will be left.

This is the first concept i want to tackle. You may be asking yourself: “am i gonna need to start doing a budget”, the answer is yes and no. It is a yes in a sense that, you have to know what you spend your money on, month in month out. You get used to it very quickly, probably in 3 months. This helps you also to spend responsibly.
Everyone needs to do a budget, successful people, companies and even governments do a budget. If you don’t you basically living on autopilot. I can actually tell you right now that f you don’t, you are unlikely going to make it in wealth creation.

The ideal time to budget is before you get paid, in other words you plan the next month before you get paid for it. This will help make sure you don’t run out of money before the end of the month. More importantly, you don’t run out of money without having satisfied all the responsibilities.

Income and Expense statement walkthrough

Let’s say we have Bongani McCoy. Bongani works as Pilot for AfroPassions Airways. He get paid R49 000 per month. He lives with his family, wife, mother, child and nanny. He is the only one working in the family.
The only statement that is important so far is the income - this is what he gets per month, therefore this is what he will spend from per month. So this is basically the first step in doing a budget. Know your income.

To be continued...