Does anyone really need a budget? Yes, because success in life mostly depends on planning. And that includes planning everything, even money through budgeting. Budgeting allows you to create a spending plan for your money, so it is advisable to make a budget.
Usually, people think budgeting is for people who make a lot of money. So they know what to use it for. But budgeting is for everybody, even if you don’t make much, you can still budget, and if you do it right, it will be enough.
Budgeting is not about you having a lot of money, but it is rather about planning on how to spend your money. Making sure you take care of what you actually need first, which is buying of your most important or pressing needs before others.
Five reasons why you need a budget
1. To prevent unnecessary spending
The most important reason for making a budget is to identify exactly where your money goes and what it does. Knowing how much you spend on cloth, food etc, through budgeting helps to prevent unnecessary buying. To also prevent unnecessary buying, make a table of preference and list your most pressing needs on top of the table and those you will need later down.
2. To avoid debt
If you don’t budget, you will find yourself in debt. This is because you will spend your money on unnecessary stuff and when it is finally time for the important stuff, you will need to borrow money in order to be able to do it. And borrowed money might even come with a high-interest rate. Create a budget. You will get to know the proper and useful way to use your money. You will know where to cut expense and what to spend on.
3. Improve on savings
When you have a budget, it will help to improve your savings. You will know how much of your money to spend, how much to save, and how much to invest. Start budgeting and check on your various expenses and compare them to your income. If you are spending more than you are saving, then it is time to start a proper budget and keep more. Spend less and save more.
4. Happy Retirement
Set aside a portion of your earning salary each month, for the contribution of retirement fund. You’ll gradually have a pleasant and enjoyable life at the end. It might be difficult for now but try and set a budget to do it now. Remember it is better to suffer now and enjoy later.
5. Helps to prepare in emergencies
When a budget is set, some amount of money is set aside for the emergency fund. As humans, we will always come across unexpected crises like; sickness, accidents, divorce, etc.. So, it is essential to set a budget for all these things, and there will be no problem with your finance during crises.
You also have to remember that it is not just about budgeting. Making a budget is useless if you don’t stick to it. So when you make the budget, you have to stick to it.