For The Masses: Budget 101
January 19th, 2009. Published under UrbanSpeaker. 4 Comments.
Arguably the most important part of great financial health is being about to make, and more importantly stick with, a budget. Often when people hear the word “budget”, they cringe in fear of luxury starvation. They feel like if they are going to have a budget, they are going to have to stop having fun and start penny pinching.
Budgets are not about starving yourself of all the things you want, they are about reaching the financial freedom needed to achieve your goals and dreams. When you start out on the road to financial freedom you have to decide what it is you want. Once you have your goals down, you will have the motivation necessary to get when you want to be.
Budgeting is not like dieting, where you starve yourself and feel deprived. It’s more like eating healthy, where you indulge every once in a while, while still getting where you desire to be. Here are a few reasons why budgeting is important, especially at a younger age.
1\\ Budgets Show You The Expenses
The primary function of a budget is to reveal where it is that all your money is going. Then you can ask yourself, “Is this helping me achieve my goals? Will this get me where I want to be?”
2\\ Escape the Race
In today’s world, people often get trapped running hard to make ends meet. Building an effective budget can help set you on the road to financial freedom and get you out of the sickness of worrying and fretting money can cause. You get to control your money, rather then your money controlling you.
3\\ Build Emergency Cashflow
Budgeting can help in the event of a disaster. If you are suddenly burdened with extra expenses, you are quickly able to assess the damage and figure out what has to be cut back on to accommodate the unexpected cost. This can help keep you out of dangerous debt, further setting you back from your goals.
The last and biggest reason for me, is this:
Budgeting allows you to buy things you actually want and can enjoy, rather then frivolously spending your money on things you will quickly forget you even bought.
All in all, building and sticking with a budget is all about attitude. If you want to fritter away your money and get stuck behind bills and mounting debt, then a budget is not for you. However, if taking control of your financial well being seems appealing to you, it is time to start one.
Tomorrow, we’ll learn more about the basics of how to build a budget.
Photo by: Jeff Keen.
4 Comments
Jen on January 23rd, 2009
budgeting is to much work and i alwasy get lost, stumbled this :)
Brittany on January 31st, 2009
I’ve started a budget recently. Considering that I am a student with two jobs means that whatever money I can actually make is spread very far and very quickly. I’m wondering how to prioritize though. Obviously rent is critical, but if I have extra money left in my pocket after I pay my bills and rent, where do I put it? Put it in my savings account for my future? Lower what’s owing on my VISA? pay off my student loans? Keep and put towards next months’ rent? What should I do?
My future is important to me, my VISA and my student loan minimums get paid every month, and I tend to have a little extra lying around after… so where would extra cash go? How do I prioritize debt?
admin on February 1st, 2009
@Fransisco: If you check out the article at http://www.urbanspeaker.com/for-the-masses-making-a-budget/ you may get some insights.
@Brittany: Thanks for the inspiration, here’s a full article addressing your question.
Fransisco on January 23rd, 2009
This is all good, but what do you use to do a budget? Is there any good software?