Understanding your finances and having better control of them has a wide range of benefits. One of the best ways to get an understanding of your finances is to create your own Financial Forecast.
Here are just 10 of the many benefits that I have experienced:
1 – You learn to understand where your money goes
By creating a Financial Forecast you start to understand where you spend your money.
2 – You learn to stick to a budget
As you start to understand your Financial Forecast, you learn to stick to the budget that you have set yourself.
3 – You learn to identify when you can and can’t afford something
By sticking to your budgeted costs in your Financial Forecast you soon start to “live” it. By having the future insights that the Forecast provides, you are able instantly have the ability to know whether you can afford to buy something.
4 – You learn to identify where you can save money
As you get more into understanding your finances you will notice that you look into your expenses closer. By looking at your expenses closer you will start to wonder whether you can reduce them. You will naturally begin to look around for better value to make sure that you are getting the most out of what you are spending.
5 – Your mindset changes to become less wasteful
Eventually you start to wonder why you hadn’t stayed on top of your finances before and why you let it get so bad. Now you don’t ever want to get back into the same situation as you were before. You will start to question whether it is worth it to be spending your money on what you do and learn to stop wasting it on unnecessary things.
6 – You start putting your money to better use
By now, you have a full handle on your finances. You then start to think about how you can get your money to work for you. Your Financial Forecast has a budget element you are fully happy with, but now you start to wonder what else you can do.
At this stage you will start looking into what else you can do to enable your money to work for you. This could involve ensuring you get a better savings interest rate. It may involve starting to look at different investments that may earn you more money. You may think of starting a side business with the excess cash to produce more income and thus improving your Financial Forecast.
7 – You prioritise your spending on things that provide more satisfaction for you
There comes a time when you have a Financial Forecast that you are happy with and you start to question what next? People often then decide that as long as they are happy with their Forecast that they will start to spend money on themselves. Luckily you have already gained the ability to identify the wastage, so you are able to pick things that truly mean a lot you.
You will start to spend more on interesting hobbies and experiences that help satisfy your soul. Sure, those past purchases may still trigger some anger at yourself, but you are happy in how far you have come and confident in where you are heading.
8 – You look towards the future more
Some people see their Financial Forecast as a mini crystal ball into their future. Of course things can change, but we are already more prepared if this were to come and are able to identify and implement the required changes.
If people look into the future and realise that they aren’t happy with where they are heading, they can make efforts to get their forecast back on track. This often means increasing their income, because the expenses are already at a level they are happy with.
9 – You have less stress and are happier
A lack of money can cause stress to us when we don’t have it under control. However, once we understand our finances we are able to let go of the stress because there aren’t as many unknowns as before. No longer will you need to bury your head in the sand! The reduced stress will make you a happier person for sure.
10 – With increased understanding, you have the ability to help guide others
Once you feel the overall benefits of understanding your finances, you will no doubt want to spread that joy. The bad thing is that talking about personal finance is still quite taboo for some reason. However, it shouldn’t be. Everyone makes different choices, but I truly believe that understanding your own finances is the first and best start to taking control of your life.
Thank you for reading, and hopefully you see the benefits of understanding your finances and creating a Financial Forecast.