The Importance of Budgeting

  • Budgeting is the process of creating a plan to spend your money.
  • Creating this spending plan allows you to determine in advance whether you will have enough money to do the things you need to do or would like to do.
  • If you don’t have enough money to do everything you would like to do, then you can use this planning process to prioritize your spending and focus your money on the things that are most important to you.
  • Budgeting ensures that you will always have enough money for the things you need and the things that are important to you.
  • Following a budget or spending plan will also keep you out of debt or help you work your way out of debt if you are currently in debt.
  • Budgeting is simply balancing your expenses with your income. If they don’t balance and you spend more than you make, you will have a problem.
  • Many people don’t realize that they spend more than they earn and slowly sink deeper into debt every year.
  • Extending your budget out into the future also allows you to forecast how much money you will be able to save for important things like your vacation, a new vehicle, your first home or home renovations, an emergency savings account or your retirement.
  • Using a realistic budget to forecast your spending for the year can really help you with your long term financial planning.
  • It’s also important to review your budget on a regular basis to make sure you’re staying on track.
  • After the first month take a minute to sit down and compare the actual expenses versus what you had created in the budget. This will show you where you did well and where you may need to improve.
  • Your ultimate goal in budgeting is ensuring that your income matches your expenses. This means that all your income is accounted for and are budgeted for a specific expense, including contributions made to a savings account.
  • If you are in a situation where expenses are higher than income you need to look at your variable expenses and find things to remove.

Is your budget under control? Do you need help to manage your finances? Feel free to call us for any assistance or advice, and don’t forget to download your free budget planner.