BUDGET

We have all gone through a time when we were not working or earning money. Maybe this was a time in between two jobs or a time when we couldn’t find a desirable job, so we decided not to apply. If you have had the same experience, you can understand the struggles that you have to endure during this time. If you don’t have someone to support you financially or you have the extra burden of supporting your family during this time, you will have to tap into your reserves and deplete your financial resources quickly.

This is why it is important to establish a budget constraint when you are not working. Budgeting can be very tough if you have never had to deal with personal finances before. Typically, budgeting consists of managing your outflows or expenses and your inflows or incomes. Ideally, you would want to have inflows that exceed your outflows. However, when you are unemployed and you have no inflows, budgeting can become even more stressful.

According to a study that interviewed 1,034 people with a 7-figure net worth or higher, 82% of millionaires admitted that they have a budget at all times to help them achieve their long-term and short-term goals.

Compare this to 34% of middle-class individuals, and only 9% of those living below the poverty line and you can see that budgeting is obviously part of the recipe to being financially successful.