Check out the Most Effective Means of Budgeting

Scale of preference: In economics, scale of preference is a very vital tool for budgeting. It is a list of wants, arranged in order of their relative importance. You know your cash flow system, you know your income and you know your needs and wants. Draw up a preference scale in order of their importance to the actualization of your goals. Why this list is very important, is that it will:

Helps you in the allocation of your resources, first to the most vital sectors of your life in the journey to financial security.

Assists you in making some rational decisions when the need arises.

Helps you in the optimal utilization of your resources.

Fosters a sense of satisfaction.

Simplicity: “Everything should be made as simple as possible but not simpler” – Albert Einstein. In budgeting, simplicity is the key. Keeping things simple is often harder than making it complex, because to make things simple and understandable means you have to think harder to provide the simple way. But at the end, the benefits of simplicity are all yours to enjoy. Simplicity means removing all ambiguities and clutters that might blur the budget, breeding confusion and clashes of interests. Be precise and concise. “If you can’t explain it to a six year old, you don’t understand it yourself” – Albert Einstein. Make it plain and understandable, “make every detail perfect and limit the number of details to perfect” – Jack Dorsey (Twitter Co-founder).

Emergency savings: Emergency is an unforeseen occurrences, something not previously planned or thought after such as a lost of job, divorce, health problems, huge hospital bills, lost of properties through fire etc. For you not to be caught unawares, you have to be prepared. Set aside funds in your budget for emergencies, these funds are not to be touched.

It is always good to think positively at all times, but bad things happen and they don’t announce themselves when they do. To be balanced in life, you must be balanced in your thinking. Think the positive and the possible negative, believe in the positive and prepare for the negative. “By failing to prepare, you are preparing to fail” – Benjamin Franklin.