The secret to building wealth is determined by your spending habits not by your income level. People of all income levels build wealth and many at the highest income levels fail and declare bankruptcy. The key is to develop a budget that allows you to live the lifestyle you desire within your current monthly income.

Budgeting starts with looking at your monthly expenses and classifying each as a need or a want. A need is a basic something you cannot live without: for example shelter, food, clothing, repayment of debt etc. A want is something you do not need to survive but a lifestyle choice you make: for example vacations, entertainment, luxury cars and the status symbol we assign to our needs i.e. a bigger house, designer clothes.

Budgeting is a monthly planning activity – it is not a one time thing – we all have change in our lives. There is no short cut – you must track your expenses each month. Start with your expect monthly income. You must subtract what you will need to spend on the necessities. You must account for your debt payments. You must budget for your savings. Whatever is left over is available for your wants. It involves a family making choices on what luxuries they can afford in the up coming month and demonstrating the discipline to keep to the budget.