Setting a long term financial goal

We know by now after reading several articles on finance that the best way to live a life void of living from pay check to pay check is by having a set budget for everything we do, but setting a budget for an entire year might be a little difficult thing to do. Setting a budget on what we want to do for an entire year might just be good way to begin our journey towards building a great financial path. A yearly budget may include the great family trip, the surprise dinner date with your spouse and other activities that may want to pay out as being significant within the year, the budget prepares you completely and makes you know how much you really have to spare.

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The importance of a yearly budget.

This budgeting plan makes the idea of an emergency fund easier for you, a yearly plan will also include setting aside an emergency fund that could last for several months and even a year as well. After setting the budget for the things money will be spent on for the year we need to understand how a little unplanned circumstance should disrupt our entire plan and that is the more reason why there has to be an emergency fund designated.

The reason why this long term budgeting option is really good is because it helps you visualize what the effect of your long term decision is going to be at the end of the day, like when you budget properly for the entire year at the beginning of the year, it will become easy and convenient to realize how well the decisions made in January according to our budget will determine our financial status by December.

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Budgeting also works for those with irregular income.

There is a regular excuse from people who do not have a fixed income to completely avoid budgeting and sometimes they are the ones who earn the most but as well spend lavishly also, the thing about irregular cash income is never an avenue to prevent anyone from making good budget. Even if your income is usually not regular, the bills you have to pay are regular, you can set budgets to fulfil those fixed bills, be sure that the days when you earn pretty high incomes is enough to cover up for the other days when you have lower incomes.

Break the pay check to pay check cycle.

To break the regular pay check to pay check cycle, we need to always have extra fund in a separate account that will cover up for the following month, this way we do not need to wait for the next pay check before we sort out our bills.


Future reading