After learning to make more money and finding out ways to protect your money, you next need to learn how to budget your money for maximum utilization.
According to the book, a budget is a plan to coordinate your most important resources (such as money and time) and expenditures. There are 2 kinds of budgets:
Budget deficit excess of spending over income you spend more than you earn Budget surplus excess of income over spending you earn more than you spend
The reason most people are poor is because all their lives, all they’ve known is not having enough money, hence, they only have a plan for “budget deficit”. They have never experienced having more money than they could ever expect to spend. They think only lottery winners, corrupt politicians, or greedy businessmen can have a “budget surplus”. The key to having a budget surplus is realizing that it is possible for you to have it.
There are 2 ways to generate a budget surplus:
You can apply Financial IQ # 1 to make more money, thereby increasing your income, or You can cut expenses, and reduce your spending.
Both strategies will tip the equation to your favor such that your income will be greater than your expenses and you create that extra cash a.k.a. “budget surplus”.
Most people and businesses only know how to cut expenses, especially in these times of financial uncertainty. But you can only do so much in terms of cutting expenses without sacrificing your mental, emotional and physical health. You don’t need to starve yourself to create a budget surplus. If you apply Financial IQ # 1 – make more money, you can stretch the other side of the equation and achieve the same thing. The same applies to business. A business without sales is NOT a business. So aside from minimizing the costs of your business, you also need to learn to sell more and boost your income!
Robert Kiyosaki offers 4 tips to plan for a budget surplus:
Budget tip #1 – A budget surplus is an expense Make spending for budget surplus a priority Pay yourself first, even when income is less than your expenses Use the pressure of not having enough money to think of ways on how to generate that extra cash Budget tip #2 – The expense column is the crystal ball Discover what you’re spending on, and you will know if your plan is working to give you a budget surplus or a budget deficit Robert Kiyosaki’s Rich Dad says, “you can tell a person’s future by looking at what they spend their time and money on.” Budget tip #3 – My assets pay for my liabilities Instead of using your hard-earned money to pay for your liabilities like a car or a flat screen TV, make that money work for you by using it to build assets and use the income from those assets to pay for your car or your flat screen TV. Budget tip #4 – Spend to get rich Know when to spend and when to cut back. Most people only know how to cut back. Spending wisely to grow your money is a harder skill to master. Learn to do more with less and use the pressure to become smarter in making more money
Rich Money Habits Review Notes:
Budgeting is boring. That’s what most people say. However, it is one the most important rich money habits that you will have to learn. A budget is like a map. The only way to get to your destination is to know where you are right now, and use your plan to discover how to get to where you want to be. Consciously working on your money habits is a life-long process, and it starts with taking care of the resources that you have – that is budgeting your money and time. What others don’t realize is that we all have 24 hours in a day. Some people multiply their impact by providing livelihood to thousands of people and generating more money not only for themselves but for the whole community. Others just sit around all day never doing anything to make their lives easier. To me, it is not a question of do we need to budget or not. It is a matter of realizing that to live your life to the fullest, you need to make the most of what you have. Be patient. The problem of TV shows is that everything is fast. Yesterday a child was born. The next day he’s already a teenager. The next week he himself is already having his own kid. Life is not a TV show. It is a series of small steps earned each day. So have a plan and learn to adjust that plan along the way. As Robert Kiyosaki says “take it one day at a time.”
Rich Money Habits @ http://www.akosiallan.com helps you discover and learn how to build long lasting rich money habits so you can achieve financial freedom with peace of mind!
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