You need to budget whether you’re old or young, just starting out or well advanced in your wealth journey. And you most certainly need to budget right now! Enough of play acting or pussy footing if you want to build wealth.
Everyday I come across people who want to be wealthy. Sadly these people only want to have the things money can buy. When it comes to making efforts they pull away. In other words these people want the “prize,” but they’re not willing to pay the “price.”
Take it from me – those unwilling to pay the price will never attain the prize. Making use of a budget and embracing budgeting is part of the price to pay for wealth. Anyone serious about building wealth this year should take this to heart. Take steps to start doing this without delay.
A budget’s basically a tool that helps you track your money. You have inflows, money coming in, and outflows, money going out. For instance at the beginning of each month track your income (inflows) and see where money’s going (outflows) with a budget. In other words a budget is your best bet to tell you where your money is going.
Budgets are awesome tools. Anyone anywhere can easily create one. Or alternatively download one from the numerous apps or software available on line. Here are 10 reasons why you need to budget right now:
Better tracking of your money
Making use of a budget forces you to follow the money. You begin to keep an accurate record of what you’re spending your money on. Better tracking equates to better control.
How would you feel if you knew what you spent all your money on in the past year? You need to start budgeting to know where your money is going. Stop being one of those who’s always wondering where their money went.
Budgets contain a wealth of information on your spending patterns
It’s vital when you don’t have lots of money to watch what you spend money on. The outflows section of your budget provides insights on all your expenses. You get a clearer understanding of what your money goes into.
This wealth of information is extremely helpful when you want to make changes to your spending patterns. And you will need to do this from time to time. You now know where to stop spending and vice versa in tandem with your financial goals.
Your budget is a financial snap shot
A well prepared budget acts as a financial snap shot. It helps to give you a clear picture regarding your financial position at a particular point in time. Your expected incomes are in one column, and there’s another column for your expenses.
The first thing that could be easily deduced is whether your income can cover your expenses. With a budget you can quickly tell if you need to make more income and lessen expenses, to whatever degree.
Another reason you need to budget right now is flexibility. With a budget you can actually increase or reduce the figures in your inflows and outflows columns. This gives you your financial picture with varying scenarios.
For example the loss of your job would cause your inflows to plummet. You will not be able to pay out as much in terms of outflows till you get another job. In such a situation you have to cut down. You are thus able to play around with several scenarios as you manage your money.
You won’t spend what you don’t have
In other words, a budget helps you to be disciplined in financial matters. According to investopedia.com, far too many people spend money they don’t have. This is more so with credit which has made people take on debt to fund their lifestyles.
However, if you create and stick to a budget, you’ll never find yourself in this precarious position. You’ll know exactly how much money you earn, how much you can afford to spend each month and how much you need to save.
Better prepared for emergencies
Emergencies arise from time to time. No one’s immune from them. They usually require a major financial outlay. Saving for emergencies is also part of saving for the future. Sickness, loss of job, not to talk of the loss of a loved one are some of the emergencies we all face.
With a budget in place you can put a portion of your income aside for emergencies. Doing this regularly will definitely free up some resources whenever situations like these arise.
A budget is a planning tool
A budget is a tool used for the futuristic purpose of managing your money. It’s best used prior to your inflows, for understanding where your money is going. It also pays to look at the current budget again just before the next inflow arrives, before preparing the next one.
Some financial experts opine that with a budget you’re giving your money a “home.” And that’s why it’s an excellent planning tool for your finances.
Make better money decisions
The financial decisions you make today will determine your financial future. Budgets make you examine every spend with a view to making the best use of it. Basic economics teaches us that resources are limited, but our wants aren’t. Budgeters consider every expense as either a want or a need.
Wants can be done without, while needs have to be met. This alone makes for better decision making when it comes to your money.
Your earnings aren’t enough
What you take home isn’t enough, pure and simple. Demand far exceeds supply. You have to embark on serious money management in order to get the most out of your money. A budget will help.
When you don’t earn enough it’s vital that the little earnings you have be deployed most wisely and profitably.
Helps in the achievement of your financial goals
According to Michelle Schroeder-Gardner of makingsenseofcents.com, having a budget helps you stay on track with your financial goals. You’ll spend without thinking about how it may impact your goal’s progress without a budget.
We all have different financial goals. Some examples include retirement, going on vacation, paying off debts, or buying a home. A budget is sure to help whatever your financial goals may be.
1 more reason why you need to budget – budgets are sexy!
Budgets are sexy! This much is what my friend J.Money believes. He’s the founder of budgetsaresexy.com, an extremely popular personal finance blog. J. tracked his expenses for 3 months, made a budget and then read some books. This caused him to realize that budgets = confidence = sexy. Today his blog has over 20 million views and he has been featured in Forbes, MSN, Kiplinger and the New York Times. If J.Money believes budgets are sexy, then you should too.
Ok, enough of the sexy stuff. I’m hoping that these 10 reasons have opened your eyes to the need to start budgeting. These days nothing prepares you on how to handle money. Money lessons are not being taught at home. Schools are also not doing anything to close the financial literacy gap.
So the onus is on individuals to find their way. Determine to try budgeting faithfully and consistently for just 90 days. You’re sure to experience a difference in the way you handle money afterwards. You can, from then on, go ahead to make budgeting a lifestyle!