The first piece of financial advice I give anyone in passing is about budgets. Specifically, how YOU need one. Still not sure why you exactly need a budget? Let’s go over all the reasons you need one, stat! After I convince why you need a budget, which is basically a plan addressing every dollar of your hard earned income to work for you, we can go into the next steps of how to make one.
- You need to be able to see where your money is going. Better yet, you can tell your money where to go. Are you one of the millions of people who doesn’t know where your money goes day in and day out? I used to be like and sometimes, I still am like that. But after years of tracking my finances, I can easily tell you where my money goes now, Starbucks and Target! But without having a budget, or tracking my finances, I wouldn’t have been able to tell you that. And I bet you five dollars you are probably spending way too much on fast food.
- You can finally set and reach those financial goals you’ve been dreaming about. Dream about going back to school, buying a new home or owning a new car? A budget can help you track your spending AND saving. You can save for numerous things and buy them in cash, which leads to number three.
- A budget helps create a life without debt. Not only will you be able to see how much money you can save and spend, budgets allow you to see where you can cut your spending to get out of debt in a hurry. You can also save towards items you might have put on your credit card before and now purchase them, debt free!
- Not only can you save for retirement, you can save for emergencies too. After establishing a monthly budget, you can regularly contribute to accounts with money your now saving for retirement and emergencies. If you have a budget established and have decided that you still can’t comfortably save for either, it’s time to see what we can cut out or how we can make more money. I’m a personal fan of both but you can always make more money.
These are only some, but not all, of the reasons why you need a budget. Next week, we’ll dive more into budgeting in our new series called, “Budget Basics.”
Do you have a budget? Why or why not?