One of the advantages of having a budget is that it helps you to pin-point extra costs as well as indicating when and where you may be spending too much money.
By: Paul Hegarty
Budgeting is a chore people put off indefinitely. You know the bills pile up, but the only time you jolt out of complacency is when you have to pay them.
This creates a problem. The difficulty is created because you deal with matters as they arise and have no organization or direction. You have not put yourself in a position of anticipation.
Why do we need a budget, family or individual?
This question may sound silly, because it is so obvious. Many people know the importance of it, yet do not have one. Often those who do not budget have little discipline when it comes to spending.
Let’s say you earns $2000 a month net. In your budget you save 5% of your net earnings. Secondly, you pay rent or mortgage which costs $700 a month. Then, you have living expenses, such as gas for the car, utilities, food, credit card bills, and recreation. With a written budget you can see the interest charges on your credit card. The budget helps you to see how much the interest charges cost. You now see how long it would take you to pay off the credit card following your current payment schedule. Believe me this is an eye opener, which can make you think twice before charging items to the credit card in the future.
One of the advantages of having a budget is that it helps you to pin-point extra costs as well as indicating when and where you may be spending too much money. The problem may not be that you need to earn more money; it may be that you budget needs attention. You can, if you are diligent, bring it back to health. You will then be in a position of anticipation.
Some say that your budget can be done in your head, but you cannot remember everything, and when it is not written down you are not as committed. If you do not have a written budget, you are in danger of spending beyond your means. Knowing that you earn $2000 a month and your expenses are much the same, if you want to increase your spending, it becomes obvious that you will need to earn more money. Without a budget, you might not discover it until you were in debt.
A budget is only important to you. Taking the time to prepare a budget reveals the truth of your financial situation. Over time, and with discipline a budget can help you sort out your money matters in a positive way.
About The Author:
Paul Hegarty is the owner of learningfromdvds.com. A guide to educational DVDs with price comparisons, reviews, and free E-books. Read this month’s e-book on “How To Spot A fraudulent Email”. Grab your free copy today.
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