"You should have a budget."
It's a phrase that's likely crossed your path more than a few times.
If you lean towards being a saver, your heart probably gave a little leap of joy (because budgets are your jam). But if you're more of a spender (like myself), you might have felt a slight tinge of apprehension, but it’s true you should have a budget and here’s why…
Increased Savings:
You budget should include a line item for savings. This should start as enough money put away to build an emergency fund. Think of how much easier it would be to deal with what life throws at you - by having an emergency fund ready to help!
Decreases in Inefficient Spending:
With a budget, you track your spending month over month. If there’s a problem area for you, your budget is going to show it. Your budget will keep you from spending money on unnecessary or impulse purchases because you’re tracking every dollar!
Accomplish Financial Goals:
It’s difficult to accomplish goals without a plan… a budget is your plan! Create line items in your budget for your financial goals, whether that be a vacation, paying off debt, saving for a home purchase, starting a business, etc.
Decreased Financial Stress:
When you don’t budget, this can lead to uncertainty about where your money is going and how bills will be paid. A budget will ELIMINATE that uncertainty. Track every dollar of income that you bring in each month, and write out where each dollar will be going.
Good Financial Decision-Making:
When you have a budget, it’s easier to make informed financial decisions, because you have a full grasp on your financial standings. Reviewing your budget month over month will help you know when to cut back on discretionary spending or adjust expenses in response to changes in income.