The importance of a balanced budget.
In order to establish financial stability there are two factors to take into consideration, the first one is the source of revenue, how much money is coming in and the second is the expenses, how much money is coming out. No matter how much money is coming in, if we do not have a balanced budget, there wont be any financial stability. To do so, we need to have all the details in regard to the expenses and we also need to know as precisely as possible, how much money we will have for a certain period of time.
Getting to know how much money we have to deal with seems very simple, however, all sources of revenue needs to be calculated and included in the global budget, this include the main source and all other streams of income. Once this is done, what is left to do, is to balance the budget with an order of priority. For example, before thinking about how much we are going to put in vacation, we have to calculate how much is needed for food, housing, clothing, transport etc. Doing so also required to make sure that there is no redundancy, like putting too much money in a area where it is not necessary. This is important, I have seen someone who could not buy a bus pass to go to work, while two weeks earlier he was in vacation. Hence, having the right order of priority is a must to come to a balanced budget.
A good budget required to get rid of all debts which can also be linked to getting rid of all redundancy. We can think about it this way, who is richer?, the person who earn 10, 000$ a month and keep accumulating debts by buying unnecessary things, or the one who earn 3000$ with no debts at all. We can also think about people who went bankrupt while having hundreds of millions in their hands, proving that a balanced budget is something required for all.
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