While everyone wants to save money in order to spend it on stuff that they care about, instead of household expenses, many do not know how to do so. Family finance can be complicated and difficult, especially for those with no experience in it or no guidance. Thankfully, there are a few financial gurus and professionals out there who have developed great ways to save a little money and put your finance in a better place than it has ever been before.
One problem that most people have when it comes to finance, is developing a long-term budget. Many people use a more short-term budget designed to live from paycheck to paycheck. This is problematic because it emphasizes surviving, instead of thriving.
What research and top experts have discovered, is that the budgets that usually save people the most money are long-term annual budgets. In an annual estimate, people usually subconsciously give themselves a lot more financial padding than they intended, leading to more savings and a better financial future. One study has shown that college students overestimate their monthly expenses by 40%, while they overestimate annual ones by only 3%. It appears the more long-term the budget, the more accurate it is.
Creating an annual budget is also advantageous because it allows you to look at things from a more broad perspective. Instead of worrying about if you will be able to pay your bills, you can set goals for how much you can save theoretically by the end of the year, and how much you actually save.
John Labunski is an experienced finance expert who suggests long-term budgeting for saving success.