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How Personal Budgeting Can Increase Your Wealth

Jun 30, 2022

When we know better, we do better, right? Sometimes that’s easier said than done. When it comes to our finances, we all know we should create and stick to a budget — it’s good practice, creates healthy financial habits, makes finances easy to understand and interpret … the list of benefits goes on. But even though we know we should create a budget, a lot of us don’t for a variety of reasons.

However, when we understand the “why” behind the benefits of making the effort and what the real, tangible, positive outcomes of creating a budget can have on our life, the motivation to start becomes much easier and much, much more compelling. So, if you are someone who has put off budgeting for too long, someone who likes to know the “why” behind the “what,” or just someone who’s curious about how personal budgeting truly can impact your overall wealth — read on!

So What IS the “Why”?

Yes, the act of creating and maintaining a budget will help you keep track of whether your bills are paid and which accounts are due each month — the normal course of daily life. But what about long-term goals — dream vacations, shopping for a house and having enough money to retire? Whatever that answer is for you, that will be your “why”: The prize to keep your eyes on, the motivation to help you make those short-term, healthy choices that lead you toward future personal financial freedom.

But, then again, why not dream even bigger and aim for actually building your wealth? A budget is your secret weapon for managing your money in a way that helps you do just that. And while we understand that the idea of wealth might sound like a far reach or even a too-lofty and unattainable goal, why not just go for it?

Whatever goal you make for yourself, you must start somewhere. And, again, that somewhere begins with a budget to better understand your current financial profile and how to plan out your success from there. So where should you start? Here are some ways to help ensure the budget you create now can increase your wealth in the future.

Better Understanding of Income Deficiencies

The first and fundamental step to budgeting your money is knowing what you’re working with — in other words, determining your total income and how often you get paid. Of course, this income amount and cadence is different for everyone. For example, if you have a regular, dependable paycheck (e.g., you are paid the same amount twice monthly), determining how much you make will be pretty simple. However, if you’re a freelancer or work a job with less paycheck dependability, it can be a little more difficult to plan for future spending and saving.

A good rule of thumb is to determine a monthly average income based on the lower amount you earned in a single month. You could also figure out a few months where your income was lower than normal and determine the average from just those months. While this latter strategy may not reflect your true financial picture, it will help keep you in the mindset of creating a more conservative budget — another great trick to help you save even more.

Once that’s done, it may be eye-opening to see on paper just how much you really bring home each month. You might even be surprised to see your income is less than you thought or hoped; maybe you didn’t factor in things like insurance, taxes, and other automatic paycheck deductions. If this is the case for you, you might consider picking up a part-time job, or finding a different job that pays more or spending less to get your income where you want it to be. Either way, the fact that you’ve uncovered income deficiencies is an important step toward creating a plan of action.

Spending Honesty and Transparency

There’s just no getting around spending money. We all do it. We all will continue to do it. Sometimes, it’s fun, other times not so much. Bottom line: You can’t stop spending, but having a better idea of your spending habits will help you do so more wisely. And that’s a good thing, because building wealth depends on this one crucial rule of thumb: You must spend less than you earn.

Part of building a successful budget is to make a list of what you need to spend money each month on (e.g., living expenses) versus what you want to spend it on (those long-term goals). It should be no surprise that excessive spending will destroy your ability to build wealth, so this will help you have extra money and make smarter spending choices in your daily life.

When you can visualize exactly where your money is going, then you can begin to get serious about what’s an essential expense and what’s a result of impulse shopping. You may soon realize that the peace of mind and sense of accomplishment that comes with having more control over your financial future will make you start to think twice about that next impulse shopping trip.

Consider Making Investments

Somewhere along the way, the idea of investing seemed to be considered a practice that was reserved only for the wealthy. False — anyone can do it! The key is to make smart investments — ones that can help put you on a path to wealth.

Of course, saving money is important (and encouraged). But compared to investments, savings accounts earn relatively little interest. In order to make money, you sometimes have to spend (i.e., invest) some money — sensibly, of course. Your newly created budget can help you figure out how much money you may be able to allocate toward investments.

We won’t lie: Investing can be a bit confusing and complicated. If you are new to it, mutual funds, 401(k)s and other employer-sponsored retirement funds are great long-term ways to ease in and earn more interest than your savings account. Also consider setting up a consultation with a financial planner, who can expertly guide you in your journey for an even better outcome of your financial goals.

Set Concrete, Specific Goals

If you think personal budgeting is something that’s intimidating or uncool, it’s time to change your perspective. Instead, think of it as a motivational road map to get to your long-term goal — which is completely doable when you create smaller, more attainable goals to hit along the way.

For this to work, it’s crucial to figure out what those short- and long-term goals — your “whys” — actually are. Simply saying, “My goal is to be wealthy when I retire” is too vague; there’s no start or end point, so there’s no way to map out your journey. So think of concrete goals, make them as specific as you can (e.g., “I want to have saved up $XXXX by the time I retire.”) and write them down. Employed wisely, a budget can help you propel those small steps forward each month that will lead to big rewards and your ultimate goal with time.

Acima Leasing: Get What You Want Now & Still Reach Your Goals

At Acima Leasing, we believe in the power of smart shopping to help you stay on track with your long-term personal budgeting goals. We also believe that doesn’t mean you should have to sacrifice the things in life you want to get and enjoy right now. That’s why millions of customers use Acima Leasing to shop the brands they want, without using credit*. Our fast applications and flexible renewal payment options* are here to help you get the shopping power you need now. We also provide the option to purchase your items early and take ownership when you want to. If you happen to no longer need your items, we make it easy for you to return them in good condition at any time with no further obligation. Take some time to see how our lease-to-own solutions* can make smarter shopping a reality for you, too.