Did you know that nearly everyone could benefit from a financial budget yet very few people actually use one?
Regardless of your income – high or low – you should really consider having one. I think everyone can make improvements in their finances and this can be achieved faster when you incorporate a budget.
I think that for many people just hearing the word “budget” instantly stirs up feelings of being in financial trouble because if you need a budget, surely you must have limited funds or you are just really bad with money. And let’s face it, we live in a society where there’s a lot of smoke and mirrors with people pretending to have more money than they do. So many TV shows and even social media propel us into thinking that we need to show off a lavish lifestyle to be successful, which for many of us, equates to living above our means just to keep up with façade of this so called dream life and appear like we have it all.
The truth is, a budget should be considered as a sort of strategic plan to help you reach specific financial goals. And when you think of it that way, suddenly it sounds like something smart people do, rather than something only for people who have no clue how to manage their money.
Here’s some reasons why you should make a budget, or as I like to call it – “a strategic plan”:
1. Do you have bad spending habits?
Are you “aware” that you do? Having a budget forces you to take a close look at your spending habits and become accountable for them. Some people have no idea where their money even goes. It comes in, it goes out, and there never seems to be anything to show for it. With a budget, you will likely realize that you are buying many things you don’t even need, and spending money on things that you shouldn’t.
Do you really need the expensive car that you currently have? Can you downsize? Do you need to have full cable? Do you need the large data cell phone plan? Do you need to have 20 pairs of shoes or can you trim your wardrobe?
If you have bad spending habits, you need to create a budget.
2. Are you spending money you don’t even have?
Back in the olden days, there were no credit cards, and not nearly the commercial industry we have today. Sure, townspeople could buy things on “time” but it was often necessities, and not things like we have today. With credit, it’s easy to live way beyond our means with the mentality of having it “now” and we can just pay for it “later”. The problem is that later takes a really long time, especially if you are only making minimum payments.
Sticking to a budget keeps you out of debt trouble with the simple mentality that if you have the money for it, you shouldn’t buy it. Budgets allow you to see both your income and your expenses. Once it’s laid out in front of you, you can then see your trouble areas and where you can make changes.
If you are spending beyond your means, you need to create a budget.
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3. Have you accumulated debt?
While most people have some sort of debt, but if you are having trouble paying it every month, you definitely need to have a look at things. Having a budget ensures that you don’t spend money you don’t have and thus incur even more debt. In fact, it will also help you pay down the debt you do have quicker because you can lay out a plan to move your money around and put more on debt – and save yourself additional interest fees in the long run.
Maybe you can downsize your car, saving you $200/month that can instantly be put on your existing debt. There are so many areas when making a budget that you can cut costs and therefore move money to other needed areas.
If you have debt, you need a budget.
Related post: 30 Reasons Why You Have No Money
4. Do you have any future money goals?
I think we all have financial goals of some sort… maybe it’s to add to your existing retirement fund or maybe retire earlier than you anticipated, maybe a dream vacation, maybe pay off your debt, maybe pay off your mortgage, or maybe to secure a good nest egg for an emergency.
Whatever the goal, having a budget keeps you focused on why you are saving your money as opposed to tossing your money away on every little thing that you desire. If you know you want to pay for that dream vacation, you are less likely to spend money on other things.
If you have goals for your money but don’t know how to make them happen, you need a budget.
Related post: 12 Ways to Save Money Every Day
5. Is your current financial situation affecting your health?
I don’t have to tell you that without your health, you have nothing. If your money is causing you undue stress, sleepless nights and general worry about how you are going to make everything work out, I’m here to tell you that nothing is worth that. The best clothes, expensive cars, latest tech gadgets, or luxury vacations are not worth the stress or worry over how you can afford to have it all or how you can pay your current bills.
Take it from me, it’s no fun losing sleep at night as you lay awake wondering how on earth you are going to pay for something. Is it worth having something if you are only going to worry about paying for it? Not one bit.
Don’t let your money control you. When you make a budget and learn to stick to it, you regain that control over your money and worry less. And that my friend, is priceless.
If this sounds like you, you need a budget.
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There are so many other advantages to creating budgets, so why wait?
Ciao for now…