Budgeting is the major key to managing your money. The term budgeting is not appealing to many people because when they think about budgeting it brings up thoughts of restrictions, hassles and headaches. Many feel they are too poor to budget or have other excuses, but budgeting can help you to save money and help you to make the most of the money that you have.
Here are some things that budgeting can help you to do:
- Stop Overspending – If you don’t have a budget you are in danger of overspending each month which limits your spending power in the future as more and more of your salary has to be applied to your debt. If you don’t like the thought of your spending being restricted, imagine how it would be if most of your paycheck was going to credit card payments leaving you with the stress of managing to live on your remaining money. Using a budget will help you to know when to stop spending.
- A Budget Will Help you to Reach your Goals – When you have a budget you can move your money to focus on what is most important to you. A budget creates a plan and allows you to track your progress towards your goals.
- A Budget Will Help you to Save Money - Those who do not have a budget tend to spend more than those who do. With a budget you assign your money to do certain things each month including an amount for savings and emergencies. A budget will stop you dipping into your savings each month as you have planned for all future events.
- Many people do not like the restrictions that a budget puts on them, but you decide how much you spend in each category. If you want to put a bigger amount towards leisure activities, if you are meeting all your other needs and obligations then you can do so. Once you set your limits you need to stick to them or address why you are going overbudget. Budgeting should not be about restricting your fun but about giving you the opportunities and money to have more fun. Make sure you include these categories in your budget: https://www.thebalance.com/most-forgotten-budget-items-2385700.
- A Budget Allows you to be Flexible – You can move money between categories as you need to throughout the month however you should not touch the money you have set aside for savings. If you adjust the amount that you have to spend in each category as you go along this will help you to stop overspending.
- Budgeting puts you into control of your finances – you will know exactly where your money is going instead of wondering what happened to it. Budgeting allows you to prioritize your spending, track how you are doing and realize when you need to stop spending and gives you the power to make changes in the present and to plan for the future.
Budgeting can be difficult for the first few months as you adjust your categories to amounts that work for you. You can use a budgeting app to help you or get back to basics and use the envelope method. https://www.thebalance.com/how-to-set-up-an-envelope-budgeting-system-2385693.
From an article by Miriam Caldwell