Budgeting & Forecasting.
Let me start by asking this question. If you don’t know where you are going, then how will you ever get there? In the context of money, budgeting and forecasting is where the rubber meets the road. This is the single most important issue because it deals with accumulating sufficient wealth for a sustainable standard of living throughout a person’s lifetime.
Budgeting is the process of understanding the fixed cost of certain categories of expenses for any given period. In contrast, forecasting seeks to understand the discretionary spending that occurs above and beyond our regular month to month living expenses.
If the business community managed their finances in the same fashion as the average American worker, then I wonder what effect this would have on the unemployment rate? If the average American worker was more effective at managing their personal finances, then what affect would this have on productivity?
A simple definition of economics is the effective management of limited resources. When it comes to our personal lives, there are always limits placed on our resources of time and energy, critical thinking, relationships, emotions, meaning and purpose, and our money.
It begins with awareness. How can a person shift or reframe their situation without personal awareness? Creating awareness around the math of our lives is instrumental in understanding our limitations and helping to establish boundaries while protecting what we may value the most.
The challenge is to know what questions to ask. It is difficult to ask the right questions when you don’t know what you don’t know. And if you don’t know, then how will you ever ask the questions that will lead you to the answers to the solutions you are in search of?
Because after all, wouldn’t it be great to be able to save up enough cash to pay cash, be out of debt, and have the money available for those bucket list experiences that are so fun to think about? And lastly, wouldn’t it be great to be able to live life with the security of knowing that you have a sustainable standard of living until the very end?
We only have one life. If we are to live a life worth living, paying attention to life’s essential course corrections is a small price to pay in the overall cost of a life worth living well.
