Western Fraternal Life :: YOU'RE IN CHARGE: Budgeting and Cash Flow Planning for Young Adults

YOU'RE IN CHARGE: Budgeting and Cash Flow Planning for Young Adults

Jul 05, 2013

By Julie Cole, CFP®, FLMI
Annuity Product Manager

Budgeting is your friend

There are many things in our lives that we have no control over. Managing cash is one thing that you DO have control over. Managing our cash flow is about making rational decisions when purchasing anything from a new shirt to a new car. It’s thinking about what we have done in the past, what we are doing right now, and how our choices will affect our financial future.

One of the best things that anyone can do is find a money mentor who has been successful in managing their money. This is not someone with investment skills, but cash management skills. If our parents are poor money managers, (like living paycheck to paycheck) then you will not want to ask them for advice on budgeting. Education is one of the keys to being a successful money manager. Seek the advice of a neighbor, relative, or teacher who knows how to budget for success. If you can’t find someone to become your money manager, become your own. Read books, articles, and journals about how you can become money wise.

5 things successful money managers have in common:

  1. They stay on budget. Their budget is in writing and they make themselves accountable to their budget. 
  2. They are disciplined savers. 
  3. They do not make emotional purchases. They make a savings plan for purchases. 
  4. They learn from their mistakes. Successful money managers become successful by making mistakes and learning from them. They generally don’t make the same mistake twice. 
  5. They don’t stress out about money. People who have a budget and cash flow plan are generally happier people than those without a plan.

Before you budget, record

Prior to making your first budget you will need to record your spending for one month. Record your weekly spending habits in the spending worksheet. After you account for every penny spent, you will create a budget based on your prior months spending habits and identify where changes should occur. Did you find out you spend a couple hundred dollars on eating out a month? Or those trips to see friends in different cities are costing you more than you thought? Find a way to save where you can and move money to where you really need it.

Getting experience in budgeting will give you confidence in growing your financial future. Since it takes a lot of practice to get good at managing money, start early in your life and you will be a good money manager sooner, rather than later.

Category: Budgeting

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