Say the word “budget” and you will find many people grimace. The biggest reason why people are intimidated by budgets is that they do not fully understand them or how they work to help you. Having a budget that meets your needs and allows you to save is the best way to get out of money troubles and ahead in your financial life. Yet so many people don’t understand that the budget is not meant to restrict you or limit you but actually to help you get ahead and take control of your finances.
The budget you create for yourself (or your family) is meant to empower you and give you the ability to do more with your money. One complaint that people have is “I need more money” but the truth of the matter is that it doesn’t matter how much money you have if you don’t know how to handle it properly. The more money you gain, the more you will spend improperly and you will still never get ahead.
However, if you use a budget that is carefully designed for your specific and personal financial needs, then you can account for bills and savings and end up ahead. If you then make more money or get a raise, you can adjust your budget accordingly. And you will be able to make the most of the raise because you are already comfortable living on your created budget.
What is more important than how much money you make is what you do with the money you have and the attitude you take towards it. If you believe that you will need more money to be happy, then you will always need more money- no matter how much you have. But learning to be content and to provide for yourself with what you do have (often called “living within your means”) will ensure that you have a positive attitude towards money and if you do end up wealthy, you will know exactly how to manage it.
So how does budgeting help with your personal finances? Let’s take a look at some of the ways:
1. It allows you to see before you how much money is coming in and going out of your household.
2. You can create a plan for savings and then commit to saving that amount each week or month.
3. You can set goals for what to do with your savings and you will be motivated by what the end goal is.
4. You can see areas in which you are able to cut corners and save more money. For example, can you pack your own lunch or cut back some of your cable channels you never watch?
Your budget is your personal plan to financial freedom and security. You don’t have to feel overwhelmed when bills come in or worried that you won’t be able to afford food because you will have all of this in your budget. If your numbers show that you don’t make enough income for your expenses than your only choices are to make more money or to cut your expenses back. This will mean it’s time to make some life changes if you find yourself in this position.