BASICS OF BUDGETING

What You Need To Know Before Making a Budget

Hello pal, I'm sure you are still tracking your expenses like we discussed in our last post and also applying other things from my previous posts. So today, we will be talking about things you need to know before making a budget.

So first, what's a budget? It is a spending plan based on income and expenses. In other words, it's an estimate of how much money you'll make and spend over a certain period of time, such as a month or year. 

Budgeting is a very integral part of your personal finance life and if you are looking to have your finance together, it's necessary that you start creating your budget.

Why Is a Budget Important?

A budget helps create financial stability. By tracking expenses and following a plan, a budget makes it easier to pay bills on time, build an emergency fund, and save for major expenses such as a car or home. Overall, a budget puts a person on a stronger financial footing for both the day-to-day and the long term

Reasons Why You Need a Budget

1. It Helps You Have Set Goals and Objectives

A budget can help you determine your long and short-term financial goals and put you on the path of working towards them. Having a set criterion or map of how to allocate your spending will ensure you can live within your means and work towards your financial goals.

2. It Exposes Your Bad Spending Habits

Another importance of having a budget is that it sheds more light on your bad spending habits, you will be to see the money you allocated for something and was spent on something else.

3. Budgeting Helps You Save More

People who do not have a budget tend to save less than people who do. Without a secure budget, you will find yourself spending more than necessary or excessively, and to be honest if you are not tracking your money and you attempt to save more, you likely end up taking the money out of your savings regularly due to expenses you haven’t accounted for.

4. It Prepares You for Emergencies

You can never really know when the unexpected will occur. Life is filled with surprises, some good and some otherwise. Having a budget helps you create an emergency fund, and it prepares you ahead for emergencies.

5. Peace of Mind

Having a budget also gives you control over your finances and it saves you the stress of calculating how much you have spent on bills at the end of the month and debts.

We will be stopping here for now. Did you get value? Let me know in the comment section and gist me on how far you have gone in tracking your expenses. Let me remind you that it's very important that you track your expenses now if you want to create an effective budget.

If you have questions too, throw them to me in the comment section, I would love to hear from you. 

Oh, and by the way happy new month to you. Thanks for sticking with us through May, and we look forward to an amazing June.

See you soon