Why Budget? (Part 3): Develops a Sense of Control
In this short series, I have been discussing five reasons why creating a budget is important and a key factor in achieving your financial goals. The first reason was about confronting bad habits. The second reason was about creating responsibility.
Reason #3 Creating a Budget Puts You in Control of Your Finances
By: peasap
How many times to we wake up to realize that something in our life is out of control? It could be our health and weight. It could be our job performance. It could be our relationships with those in our family. Many times, it is an issue with our finances.
We grow up. We go to the college of our choice. We have a good time. We graduate and get our first “real job.” We buy a car (with a payment). We rent our first post-college apartment (that we hope is a serious upgrade from what we had in college). We outfit that apartment with furniture and electronics. We buy new clothes. The list goes on. Then all of a sudden, we realize that everything that we’ve built was built with false money! That money is called “credit.”
Student Loans
Car Payments
Credit Cards
Store Financing (furniture, electronics, appliances, etc.)
This wonderful life that we began to build during our twenties turns out to have been built on a false foundation (financially speaking) that has finally come due. Whether it’s through a pay cut, a layoff, or even maxing out all available credit lines, we realize that our finances are totally out of control. Some throw their hands up and act as if their situation is the fault of someone else (that someone being the “economy”). Responsible people will look in the mirror and realize that the person staring back at them is a huge part of the problem.
That “Man in the Mirror” moment is the point in which change will start to occur if you have the wherewithal to do the necessary work. Sitting down and actually creating and following a budget will put you in control of your finances.
Here’s how you will gain more control over your finances by using a budget:
- Face your reality – Are you satisfied with your income? Do you actually have something to show for what you make? If you are satisfied with your income, then make it work for you. If you are making what others consider to be “a lot,” isn’t it kind of frustrating to be struggling to get by?
- Sets Boundaries – Are you making decisions that are best for you (and your family if you are married) or are you doing what others are expecting of you?
- Sets Expectations Early – If you know that you only have a certain amount of money to spend in a certain category (restaurant, entertainment, books, etc.), then you’ll be less likely to make those impulse purchases that get so many people in trouble.
Creating that budget will give you a since of control over your money that you did not have beforehand. Instead of waiting for life to happen to you, you go out and make life happen. You make a plan, you do your absolute best to follow it, and then you reap the rewards later.
Question: What does personal control of your finances look like to you?