by Jane Hermiston

Created on: May 18, 2008   Last Updated: November 30, 2009

Achieving financial stability represents the attainment of freedom, security and confidence. Certainly, money can't buy love or happiness, but financial stability grants us freedom through the availability of a wider range of lifestyle choices, security in knowing that we are better placed to weather any unexpected events, and greater confidence to follow our dreams as we are not bound to any employer or situation. Achieving financial stability involves four major areas: planning, motivation, monitoring and perspective.

Planning:
Effective planning involves far more than just preparing a budget, however a high-quality budget is an essential element of success. To develop a budget you need to honestly assess income received and expenditure. To do this write down every single transaction made over a two week/month long period. Then translate this to put income in one column on your page and expenditure on the opposite. This is not your budget, merely a starting point assessing current cash flow.

A budget is a dynamic instrument that continually improves as you find new ways to earn or save money. On the right of a new sheet of paper write the amount of money you wish to save per week. On the other write your weekly income. The difference between savings and income, then, is what you have available to spend during the week on expenses. You may have to adjust your budgeted saving level if your essential expenses outweigh your available expenditure, but often you will find that many of your expenses are in fact not essential and you can quite easily reduce or remove these.

The other essential element of planning is organization. Budget blowouts occur most often because people find themselves unprepared for a situation. For example; if you have budgeted not to spend any money on take-out, but haven't shopped for food to take to work for lunch, then your choices are breaking your budget or going without food, and you can guess how often the latter occurs! By drawing up a rough sketch of your next week you can identify what to do to ensure your budget stands up to any challenges.

Motivation:
Even with proper planning, every day brings choices between spending and saving, or earning and leisure. To cement habits that will lead to financial stability there needs to be an extra motivating factor on the side of saving and earning that will tip the decision in that direction. When setting a motivating factor in place it is important to not just copy off someone you admire

• 1
• 2
• Next Page >>