Budgets are nifty little tools that help us balance our savings accounts, our bills, and our spending money. They help us to know and understand what money needs to be spent where. Without a budget, we may step out of line and become behind in all financial aspects of life. With a budget, we are more organized and our financial situations are always improving.
But, what are all the benefits of having and maintaining a budget, other than that it keeps you organized and stuff? Let’s check out the reasons.
Budgets allow you to be in control.
That’s right, you’re the one in control of your own budget. No one can tell you what to do with your money or where to put it. But, when you don’t have a budget, the roles reverse. Your money tends to control you. Without a budget, you’re apt to spend money foolishly and vicariously just because you think you can.
Get that budget under control. Have full access to where your money goes and maintain this at all costs (pun intended).
Budgets get rid of money stress.
Budgets help you map out what money is going where on a weekly, monthly, quarterly, or yearly basis. Staying in line with your budget will allow you to understand what money is for living and what money is for fun. And, without a budget, problems may arise, including but not limited to a low bank account, little knowledge of what money is in your bank account, bills being paid late, and other financial crisis’.
To be honest, when I’m not on a budget, I tend to worry about how I’m going to pay that next bill or how I’m going to go to dinner with my friend next week. Worrying about money will raise your stress levels, and then your hair will be failing out, you’ll need to go buy some hair growing products, and you won’t have the money to help yourself out. Phew, that was a long rant. But seriously, budgets will help you with these problems.
Tip: If you have your bank accounts automatically withdraw money for bills without you having to fill out a check, keeping up with your budget will be easier. This keeps your budget in check. But you have to remember when the money is going to be withdrawn, so that you a.) Have enough money in the account for the withdrawal, and so that you b.) Have enough money to get you through the week.
Budgets increase your confidence.
I understand you’re probably wondering how budgets can increase your confidence. But think about it for a second and you might understand on your own.
Hint: If you know where your money is and where it’s going, you’ll feel more at ease.
Budgets provide you with the necessary money information you need to know. If you have a strict budget and you maintain it all the time, you’ll have this sense of control, which will in turn boost your confidence levels.
Added Bonus: Budgets help you make money decisions more efficiently and more confidently. Instead of wondering how much money you have left in your bank account, you can just look at your budget, see how much money you have in that given time period, and make your decision from there.
Now, how do you make a budget?
Map out your weekly or monthly income.
Try not to go out too far ahead with your budgets. If you try budgeting quarterly or yearly, you may end up straying from your goals. But then again, everyone’s different. My suggestion is to do your budget weekly or monthly.
Take your weekly or monthly income and assess it. Put your pay stubs together and total up how much you make in a given time. Try to get more of a specific number and less of an estimated number.
Make a list of your expenses.
When making a list of your expenses, try your hardest to see which ones are fixed and which ones are not fixed. The fixed expenses will not change each month (or they may vary a few dollars here and there). Such expenses include mortgage, rent, car insurance, health insurance, car payments, etc. List these up to see how much money will be taken out of your weekly or monthly budget. Subtract the number of fixed expenses from your income and you’ll be left with a lower number.
Set up a goal for your variable expenses.
Fixed expenses hardly change, variable expenses always change.
Now that you know how much money you have to play around with for the week or the month, you can start budgeting the variable expenses you have. These expenses can be played around with so that you can catch up on your bills and savings. Such expenses include groceries, eating out, gas, and entertainment nights. Try your hardest to be reasonable in each of these categories, and don’t go overboard if you don’t have to.
Suggestion: When planning out your variable expenses, try incorporating a retirement and emergency fund in there somewhere. Save a little bit each week so that you’ll have money for both situations. And, if you have the money, set up a freedom account so that you’ll have extra money to do what you want when you want. For example, going on vacation or purchasing a new car. Then put money aside for all the other variable expenses.
After you factor everything in, subtract your variable and fixed expenses from your total income. The rest of your money will be used for savings or catching up on your financials.
Keep track of all spending.
This only pertains to you maintaining your budget. At first, it will be difficult to stay on track. But if you constantly look at your budget to make sure you aren’t straying, eventually you’ll get into the habit of spending money wisely and you won’t have to check in so often.
Make sure you revisit your budget each month. This way, if anything changes with your income or your expenses, you’ll be aware of what money you do or do not have, and you’ll be able to continue with your budget accordingly.
By Jenny Lyn