Budgeting

As Warren Buffett said “If you buy the things you don’t need, soon you will have to sell the things you do need.”

Budgeting is simply balancing your expenses with your income. If they don’t balance and you spend more than you make, you will have a problem. Many people don’t realize that they spend more than they earn and slowly sink deeper into debt every year.

Why is budgeting important?

In short, budgeting is important because it helps you control your spending, track your expenses, and save more money. Additionally, budgeting can help you make better financial decisions, prepare for emergencies, get out of debt, and stay focused on your long-term financial goals.

But there are some budgeting myths

I don’t need to budget
I’m not good at math
My job is secure
Unemployment insurance will tide me over
I don’t want to deprive myself
I don’t want Anything Big
I’m debt-free
I always get a raise or tax refund
I just don’t have the discipline

and so on.

Let’s be honest, when you operate your finances without a budget, you don’t really have anything holding you back from spending beyond your means. You might have a general idea about how much money you can spend each month, but without hard, accurate numbers, it’s easy to lose control of your spending habits.

If there is one thing in particular that doesn’t mix well with overwhelm, it’s personal finance. One of the best ways to combat financial overwhelm is to live your life on a budget.

Budgeting helps to keep you on track when you are trying to achieve your financial goals. Setting goals is pretty easy. Anybody can do it. You just think of achieving something, and then set a defined timeline to achieve it. But, setting goals and actually achieving your goals are two very different things. In order to achieve a goal, you need to stick to a plan, and stay focused on a clearly defined process; and that’s where having a budget is so important.

Budget should include an emergency fund that consists of at least three to six months, worth of living expenses. This extra money will ensure that you don’t spiral into the depths of debt after a life crisis, since life is filled with unexpected surprises.

How many nights have you tossed and turned worrying about how you will manage paying your bills? People who lose sleep over financial issues are allowing their money to control them. Take back the control. When you budget your money wisely, you’ll never lose sleep over financial issues again.

Longer you live without a budget, the easier it becomes for your financial life to get messy. Between all your monthly bills, debt payments, and all your other expenses, things can just slip through the cracks. In other words, it’s easier to live on a budget and keep your financial life organised.

One of the more obvious benefits of budgeting is that it helps you save money.