Let’s face it, setting a budget for your household seems restrictive and depressing. When you have to look at your income and make lifestyle changes in your spending habits, reality sets in! Making a budget actually frees up your spending years down the road. This does not mean you will have to live as a peasant until retirement. You will just have to be wiser with any unnecessary purchases and learn to say no to them.
#1. Gives peace of mind on your money
Making a budget gives peace of mind because you know exactly when and how much is being withdrawn from your bank account. When you are aware of how much is going into the bank and understand what will be coming out, there will not be those withdraw fees that come at a hefty price.
#2. Helps you make goals
Everyone sets goals in life. Money management should be no different. This helps with a retirement goal as well as short term goals of paying debt off quicker or saving for a new ride, or that cruise you’ve always dreamed about.
#3. Helps you stay away from debt
The banks enjoy preying upon people, handing out plastic, because most credit card users do not fully understand the dollar amount when they swipe their card on a transaction.
Seventy years ago when there was only paper currency, people were more cautious to keep money in their wallets, because as soon as the money was gone they were in trouble.
Having a budget is similar to carrying cash only. You are more aware of what you have going in and what money is coming out, keeping you away from debt collectors.
#4. To have an emergency fund
If you haven’t already, one of the first goals you need to achieve quickly, is getting an emergency fund set up. Life throws many curveballs and change ups. If you save just enough for your monthly bills and have nothing else to fall back on, huge debt can stack up quickly.
According to well known author Dave Ramsey, $1,000 dollars for an emergency fund is a good start to prepare for the unexpected E.R visits, the blown transmission on your transportation, or that ache in your tooth that just won’t go away.
#5. Shows you where you throw away your money
Budgeting your finances shows you exactly what extra spending needs to be cut out. It will help you question each purchase on whether it’s a need or an unnecessary want. Is that newly released DVD, or the newest iPhone something you can live without?
#6. Helps you save money faster
Again, budgeting makes you more aware of your money. This helps you to save money quicker because you are on the straight and narrow with a game plan. It’s okay to spend money on amenities and special purchases when you have saved for it. Just remember not to spend more than you make and not give up on your budgeted spending.
#7. To have money for retirement
Budgeting helps money accumulate for a more enjoyable retirement. When you make goals with your money, by setting aside an amount each month, and also investing, when retirement comes you should have enough to fall back on and enjoy.
What are some reasosns you need a budget?