Budgeting process for responsible investors
MOST successful investment decisions are based on well-designed budgets. In order to draw a budget, every investor needs to understand his / her cash flow pattern. This helps in determining a portion of income that can be allocated towards various financial obligations.
Therefore, a budgeting process enables an investor to balance and be in control of his / her cash flows well in advance. A cash flow involves the inflow and outflow of money from one’s pocket or bank account in settlement of various financial obligations.
Inflows usually come in form of salaries, business profits, remittances from relatives, social welfare distributions or donations. Outflows comprise financial obligations such as rentals, medical and school fees, savings and investments.
Investor tips for budgeting
◆ Set / review your financial goals
◆ Know your income and expenditure pattern. You can do this either by examining your bank statements, receipts or even bills
◆ Keep a written record of every expense. This will help in keeping track of what you are spending your money on.
◆ Also, record all your income. Your bank statement will help you keep track of your income balances.
◆ Always match your expenses against your income and make necessary adjustments so that you remain on track towards meeting your future financial goals. Investing may seem impossible simply due to mismanagement of personal finances. Below is summary of basic steps in a budgeting process:
◆ Review your financial goals
◆ Estimate your income.
◆ List all the expenses and the corresponding amounts needed for each expense.
◆ Decide and commit on some minimum savings culture for long term investments. Rome was never built in a day. Start investing today using the small savings that come out of your budgeting process.
Upcoming AGMs/EGMs Zimplow Holdings Limited, Head Office 36 Birmingham Road, May 23, 1000 hours
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