Wise Accounts Blog

"Not enough money at the end of the month" has to do with living freely (carelessly?) not being able to say no to the many solicitations that come past our way. For some spending is a way to make oneself feel good - for others, they never have been taught how to care for their money in the first place.

"Why should I care about something I do not have?" that's precisely the point! Unless you keep tabs on the little money you have it will never grow. So I am going to spring on you another dirty word: budget. "Oh, no I hear." Well, you are budgeting all the time without knowing it.

For instance if you have an apple pie with 5 people around the table you may divide the pie first in half, and in turn each half into 3 pieces giving you a total of 6 pieces. Why 6 pieces instead of 5? That's budgeting in action. First it is much easier to divide a pie into an even number of slices. Second a latecomer may show up or you may want to offer your guests a second helping.

And that's my point right there. Don't just fly by the seat of your pants but set aside some extra for a rainy day. There are two ways to do a budget:

The static budget is to look at last year's figures, bump everything by 20% and hope for the best. That is obviously a cop-out. An improvement would be to tally all your expenses and prioritize them by order of importance. Obviously if you are faced with an empty bank account way before your next pay comes in then something has to give.

Can you go cold turkey on cigarettes, alcohol, new clothes, electronic gadgets or movies? Your lifestyle and your finances are inexorably linked. Setting goals and monitoring them might be the way to get you out of that hole.

The dynamic budget is a tool that Wise Accounts offers. It takes into account all your recurring transactions with the periods at which they come due. Wise Accounts then goes away and produces a cash flow forecast as a report or a graph to show you whether you are heading up or down with your bank balance 3 months, 6 months, 12 months from now.

Now get to work and start tweaking those expenses, run the report again and see the impact of a seemingly small change over time... you will be impressed! That will give you the motivation to hold your course through what may come. Because you have your mind set on some agreed outcome in the foreseeable future you have gained the justification and the resolve to stick to your plan. You know that the result is well worth it.

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