I believe that creating and following a budget is the key ingredient in taking control of your finances and achieving your goals. In this introductory series, I will reveal five reasons why creating a budget is essential to hitting typical targets such as getting out of debt, buying a home, giving more to church or charity, saving for retirement, etc.
Creating a Budget Forces You to Confront Bad Habits
Many people get a job, get that paycheck (especially if it is a bigger one than before), and just mindlessly spend their money. Some may have the discipline to sit down and pay all of their bills first, but then every dollar after that is fair game. Keep doing this for a long time, and you’ll all of a sudden realize that your income is not enough, which leads to using credit to fill the gaps. Weeks, months, or a few years later, you’re sitting there with thousands in credit card, car, and furniture debt in addition to all of the student loan debt you accrued during college. That’s how I lived as a college student. I got my financial aid check after all tuition and fees were paid and pretty much spent away. Now, I did my best to make sure that money lasted until the end of the semester, but eventually, I had to pull out the credit card to make it.
Creating that first budget is going to force you to look at your spending habits, because you are going to have to assign each dollar you make to a certain category and only spend that amount of money. While looking over your spending habits, some of you will realize that you barely have enough to meet the basic necessities of life while others will realize that though they make a lot of money, they are not spending it in the best way possible to achieve the real goals they have in life.
How often do we complain about the lack of money to reach our goals only to realize that we are spending a lot of money each month on items that are not really necessary? Is that daily latte from the Starbucks really worth it? What about the gym membership that is virtually inactive? Does the amount spent watching cable, Netflix or Hulu Plus worth the expense? Do I really need to eat that much take-out? Given the different circumstances people are in, I could go on and on with different examples, but I think you understand what I am saying.
Creating a budget and sticking to it is going to force you to confront these habits and make sacrifices. This is the only way to achieve the goals that you wish to achieve when it comes to your money. Though I am sure that there are many people out there who are truly not making enough money, increasing income alone will not solve many people’s problems. It will just give them more money to spend poorly. So, before we begin the process of creating our first budget, spend some time analyzing your spending habits. Think about the expenses you need to reduce as well as the expenses you need to eliminate completely. You will need this information to create the best budget to get you on track to fulfilling your financial dreams.
If you like this post, please share it with your friends through email and social media. It will help me tremendously. I would also love to hear your comments below.
Question: What are some items in your budget that you feel you need to reduce or eliminate completely?
