If past history was all that is needed to play the game of money, the richest people would be librarians.
- Warren Buffett
People often say, "Millennials don't know how to manage money, save money, or that Millennials are ruining the economy because they are not smart with money". When I first heard this I refused to accept that statement. I refused to be seen as a Millennial who didn't know how to be "smart with money".
I honestly didn't know where to start, though. So, I turned to the college I was attending and searched for classes that could teach me the basic of personal finance. It had been about 8 months since I heard that statement when I stumbled upon Personal Finance 101. It was the class that was going to change my life, I just didn't know it at the time.
The biggest thing I learned from the class was how to build and maintain a monthly budget and most importantly how to follow the budget and make sure I was sticking to it. See, people are always giving us advice on what to do with our money. Do this, do that, oh no, do this, this worked for me. No one once told me to build a monthly budget and STICK TO IT. You can build the fanciest monthly budget in the world, but unless you stick to it, it isn't going to be any use to you.
So, what is a monthly budget? A monthly budget is a financial plan you follow on a monthly basis that tracks your income, bills, and any other expenditures. The advantages of a monthly budget are 1. You know where your money is being spent, so you can cut expenses if needed. 2. It forces you to face the fact of your finanical state, so you can improve it. 3. I believe it is the basis of all the other aspects of personal finances. For example, you can't start investing money if you don't know how much money you have to invest. The disadvantages of a monthly budget are 1. It forces you to spend extra time getting to know your money. 2. It can be scary to know where you really stand with your finances.
Now that you have some grasp of what a monthly budget is, let me answer the original question. How did a monthly budget changed my life? My monthly budget allowed me to know how much money I could put into paying off credit card debt. Which is extremely important if you want to become finanical independent. I knew I could put $1,200/month towards my credit card debts, and I knew I had $6,500 in credit card debt, I could then calculate how long it would take me to pay off the debt. It took me just under 5 1/2 months to pay the debt off.
Let me tell you, if you have never had credit card debt then you don't know how quickly they can ruin your life, but for the people who have credit card debt please know that it is possible to get out of debt! Once you do, once you make that last stupid credit card payment the since of relief and confidence you receive is priceless. Since I made that last credit card payment I have yet to be in any more credit card debt, I am going on 3 months of no credit card debt and it is the greatest feeling in the world!
Since the creation of my monthly budget I have paid off debt I never thought I would, I have an actual savings with more money than I ever thought I would have, and on top of that I actually have a huge nest egg in investments. My monthly budget paved the way for me to get on the correct path to financial independence and wealth!
Quick link to the Monthly Budget Template that I currently use: click here.
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