Budgeting is the process of preparing a plan to spend your money. This spending plan is called a budget. Creating a Budget allows you to determine in advance whether you will have enough fund to do the things you like to do.Here are four important factors tells you why you need a Budget.
1: For peaceful mind
If anyone who are not preparing a monthly budget for his personal finance always be worried about his finance asking ‘money coming and going, actually where is money going’
moneyadviceservice.org.uk says Over half of UK households keep a regular budget. Most of those who do say it gives them peace of mind about how much they are spending, and makes them feel better about life in general.
Studies are showing every house holds should have a regular monthly budget in order to make financial progress. Monthly budget gives you simple understanding where is your hard earned money is going and give the inspiration to stick to the budget.
Monthly budget a simple step to your financial progress and give you a peace of mind about facing unexpected life events.
2: Budget for the success
Budgeting makes balancing your expenses with your income. Budget tells you are spending more than you make or you are spending less than you make.If you are spending more than you make , you will have the problem. Normally people are not aware they spend more than they earn and they sink deeper and deeper into debt.Budget ensures you don’t spend money that you don’t have.
Since budgeting is the spending plan, it shows you always have enough money to buy the things you need or not. When you identify the unwanted expenses the chances will come up before you make savings by reducing unwanted expenses. Indeed, personal finance management comes down to budgeting, which is the best way for everyone to accomplish such short- and long-term financial goals as emergency savings fund, saving for retirement, buying a new home or getting out of debt. Financial experts say, the cash goes out from your wallet must go with determined plan. When people start to budget, they often find that their current income actually makes them happy by saying they live on less than they make.
Once you understand the status of your finances–specifically, identifying how money come in and how much goes out–you can better see how to reach your financial goals.So we can say that preparation of budget for the successful life.
3: Budget for Emergency fund
Simply by keeping track of where your money goes each month, you’ll likely find areas where it’s easy to cut back. Such as two or three more dinners at home, or lunch from home – there’s extra cash hidden in all kinds of your expenses, and you can easily track it and that amount can save for Emergency fund.
Tracking unwanted expenses is easy to create emergency fund and by preparing budget making opportunities to create Emergency fund very easily.You cannot trace anywhere or not eager to increase your income for creating Emergency Fund ,just prepare regular monthly budget and track your unwanted expenses.
4: Budget for Long term Financial Goals
Budgeting makes the importance of setting Financial Goals and you will get the road map for setting goals.Begin by estimating how long will take to reach your Financial Goals and prioritize the goals.Because different people have different priorities when come to their Financial Goals.So prioritize according to your condition and start investment for your Financial Goals.
Without budgeting it is hardly to say you will prepare for reaching your Financial Goals and Financial goals required continuous investment and will take years.Hence without budgeting probably you will miss the road map for continuous investment towards long term Financial Goals.