Budget. It is such an evil word to most of us. Yet, we all know that budgeting is crucial to financial freedom. Setting up a budget is not the most exciting activity and sticking to it can be difficult, but it pays out (literally) in its rewards. As we like to emphasize, it can also be quite simple, which ensures that it is worth your time.
Knowledge is power
Budgeting gives us knowledge of our finances. Knowing exactly how much is coming into our bank accounts and how much is going out allows us to make plans with our money and avoid pitfalls that come with poor financial decisions and planning. By creating a realistic plan taking in all factors (income, monthly bills, and financial goals), the road to financial stability becomes much clearer and easier to achieve. The knowledge that having a budget that you can stick to also helps eliminate much of the worry and anxiety that many of us feel when it comes to making ends meet.
Identify and Limit Expenses
Budgeting also makes it much easier to identify what areas of your spending need to be addressed. Many of us overspend in many areas without even thinking about it. We blow our money on frivolous items and then are reduced to using credit cards to fill in the gaps. This in turn creates more debt, more bills, and more worry. With a budget, necessary adjustments can be made to reduce overspending and it is much easier to avoid debt or create a plan to get of debt once and for all. You can stop living paycheck to paycheck.
Is budgeting an easy task? The answer is yes and no. Think of it like a diet – the initial set-up is pretty easy, but the work is tough. When we first decide to diet, we clean out our cupboards of junk food, shop for healthy alternatives and make a plan to follow. It’s the same with creating a budget. You can find all the tools that you need to set up a budget online or you can create your own on a piece of paper. The tough part is when it comes to actually following the plan. Will there be days you don’t do as well? Of course. But you get through, you reevaluate, you make adjustment, and you move on to achieving your goals. Remember, it can be a simple budget. It’s up to you to personalize it.
And in the end, you will have achieved your financial goals. You will be debt free, living comfortably, and enjoying life-long financial freedom. What’s not to like!?
When did you realize that budgeting is important?