[p1vc-video]

Guest:
Alvin Tabañag
Registered Financial Planner

Budgets are the only practical way of getting a grasp on spending, as well as to ensure that you’ll have enough money for your retirement.

Personal-finance programs or web sites like Quicken and Mint.com and the Mortgage Magic System offer built-in budgeting tools that can assist you with financial preparation for retirement. Every time you make a deposit, create an reconciliation, pay a bank card bill or make an electronic payment, you can designate it to a certain classification, like “income,”” apparel,””groceries, “” child care” or” health plan.” Some programs will enable you to download your payment transactions as well as deposits straight from the bank, instead of needing to enter them by hand. However, the downloaded transactions will have no categorization, so you’ll need to add the classifications on your own.

The point is to recognize your spending pattern in the previous periods in order to control and budget your finances and for financial preparation for retirement . If your financial resources aren’t electonically enabled, you can still manage your spending the using traditional means. Start by gathering your documents from the previous twelve months. Then total the amounts of your earnings and expenditures in a collection of classifications in a logical manner that makes sense to you, and also enter them into a spread sheet. You may have a substantial amount of spending that’s undocumented, unclassified.

You’ll have to take some time and pare the unclassified items down or better yet, resolve all items to a particular category. With this information, you can consider this as your spending plan, the spending that was typical in the previous year. Starting from this data, it’s time to  find out where you need to cut back. This is particularly urgent if you spend more than you make. If your spending exceeds your earnings, then your top priority ought to be to cut back.

If your household runs in the black, great!  You could still reapportion several of your expense items. Here are some ideas to bear in mind: Watch out for money leakage, like withdrawals from the ATM machine evaporating from your pocket without noticeable explanation (that is, you don’t know where the money went or its category.

 

After you formulate a budget based on your past history, you’ll need to stick with it.

It cannot be overstated how important a budget is as part of financial preparation for retirement. Retirement planning is a major concern not only to people in the United States, but to people all over the world. The video that accompanies this post highlights this in detail. The video points out some major dos and don’ts in achieving a richly rewarding retirement and also some of the pitfalls to avoid.