Since budgeting allows you to create a spending plan for your earnings, and ensures that you have enough money for everything you need each month, learning to create and stick to a budget is important. According to My Money Coach, following a budget or spending plan is also the best way to keep you out of debt or help you work your way towards paying off your loans.
Sitting down and setting a budget can also help you figure out what your long-term goals are so that you can start working towards achieving them. If you have a partner, you should try to set your budget together and have regular conversations about finances to avoid potential arguments over them. You should also try to respect each other’s philosophy on money and divide the financial responsibilities so that each partner pays for certain things. If you’re single and struggling to get control of your personal finance issues, be sure to let your family and friends know, so that you can receive their support and encouragement along the way.
Budgeting your money also ensures that you don’t spend what you don’t have. Far too many of us have gotten used to living on credit; according to CBS News, the average household credit card balance in the US is almost $7,200 in 2015. This is a dangerous position to be in considering today’s volatile economic climate, so if this applies to you, then be sure to apportion a certain amount of your budget towards your credit cards and try to pay more than the minimum balance to avoid paying only the interest on the card, rather than the actual balance.
Another great reason to set yourself a budget is that it can lead to a happy and secure retirement. Set aside a portion of your earnings to your IRA, 401(k), or other retirement fund and you’ll eventually build up a nice nest egg. Budgeting your earnings sensibly also means that in the event of an unexpected emergency situation, you won’t be left out in the cold. Preparing for a “what if?” situation, even as little as 10% of your monthly income, could save you from financial turmoil or spiraling into debt if you need to raise cash quickly later on.
Setting a realistic budget and achievable savings goals allow you to get a grip on your spending habits. By writing down and tracking all your expenses, from the most important ones like rent, utilities, and car maintenance, to the miscellaneous expenses and impulse-buys, you can help yourself cut out on unnecessary spending. You’ll be able to stop living from paycheck to paycheck and learn to live within your means.
You can meet your family’s changing financial needs and reduce the stress involved with saving for large purchases by accumulating money each month. Before long, you’ll start to become more financially aware and be able to differentiate a want from a need. Living on a budget doesn’t have to be all about penny pinching and saving every dime, but budgeting matters and it’s time to implement yours and plan for a brighter financial future.
About the author: Michael Peggs is the founder of Marccx Media, a digital marketing agency specializing in SEO and Content Marketing. Before Marcxx, Peggs worked at Google in business development, forming digital media and advertising partnerships. He is also a blogger and podcaster, hosting the iTunes Top 10 New & Noteworthy podcast You University – The Personal Branding Podcast.