Do you try to stick to a weekly, monthly, or even an annual budget? Maybe you figure since you can barely make ends meet that it's a waste of time to even try to budget your money? Maybe you've never even thought about budgeting?
Even though it may not seem worthwhile, or even important to you, budgeting your money is actually very important to your financial future. Not only will it help you to see places where you can (and should) save money, but setting financial goals and objectives and then achieving those goals is a great way to boost your monetary self confidence. I can almost promise you that, achieving even the smallest objective will be just the encouragement that you need to strive for the next, bigger financial goal.
Budgeting is a powerful financial tool even for those of us with little money – but it's not foolproof. Emergencies arise. Unexpected expenses. Income decreases or increases. So many factors can have an effect on your budget, but if you don't HAVE a budget, there's absolutely no way to prepare, endure, or recover from some missteps. And you certainly won't make near as much headway toward reaching your longterm financial goals as you would if you simply sit down, analyze your spending, and create a workable plan to stay on track.
Here are some of the best reasons for you to create and stick to a budget this year:
- Keep Your Eyes on Your Financial Goals: Having a plan for your future involves sticking to a plan for today, but if that plan seems too far out there, it's really easy to lose sight of where you want to be. Being able to see where you are, where you've been, and where you want to be (and WHEN you can expect to get there) is crucial to your success. If you can't see it, it will be that much harder to work toward it.
- Curb Your Spending: It seems like there's always something that we think that we want or need out there, and even though it's really easy to do so, we shouldn't just pull out that credit card and slide it through the machine every time we're tempted. If for no other reason, having an analysis of your current (and past) spending habits (and needs) can keep you from adding yet another bill to an already tight budget. Once you know what your bottom line is each month, I can almost guarantee you won't want to see that number decrease!
- Emergencies: One of the most important things you can do when you create your budget is to allocate a certain amount of money each week (or month) toward setting up an emergency fund so that you can get through the next financial crisis, whether that crisis is illness, job loss, an accident, or something else entirely. With the right amount of time and planning, you will be better suited to survive the next financial emergency that you face.
- Cut Unnecessary Expenses: As you analyze your finances, you will gradually accumulate enough information (and knowledge) that you'll just naturally see areas where you can cut back or eliminate certain expenses… for example, cutting your cable subscription and streaming instead can save lots of money, maybe theres a gym membership that's still coming out of your checking account on a regular basis that you're not using, or maybe it's something else entirely. The point is, if you don't pay attention to it, you may not realize that you can eliminate it.
Truthfully, these are just a few of the reasons for you to seriously consider making a budget and sticking to it this year – some may make sense for you, some may not. You may even have a totally different reason for wanting to set up your own financial plan, but the important thing to remember is that you have to have a plan. Granted, your plan should be flexible, and you should review it regularly to see where you need to make adjustments, but you still need to have a plan if you ever want to achieve your financial goals.