Are you over-spending? Do you not get to know how much of the cash you end up spending after you withdraw money from the ATM? Do you feel like your money is constantly flying out of your pockets and you have no clue where? Do you have to run to your parents or friends every time you are short of money? If you are sloppy and irresponsible when it comes to money, read along to realize how money management can change your life.
Understand your spending habits- how much do you earn, how much are you spending on the necessities, how much are you saving and how much are you left with in the end. In the start of the month, figure out your most likely spendings and divide your money accordingly. If you have some big investments to make this month, you may want to push other allocations. A budget will help you organize your savings and spendings, and get control over your money in a systematic manner.
You start spending less on unimportant things, start using your credit cards a little less and improve you bad spending habits. The 50 channels you don’t watch on your cable, the 20 pairs of heels you don’t require, membership of the gym you never go to, and countless other useless things you spend on. Budgeting helps you to recognize and cut out on unnecessary spendings, fees, penalties, and interests. When you don’t spend money you don’t have, on the things you may never need, you are becoming financially more independent. What is the point of earning how much ever you do, when in the end you have trouble paying off your bills?
When you start preparing a personal budget and start maintaining a record of all your expenses, you tend to become more respectful and responsible towards your money. A budget forces you to set some goals, spend and save as per those goals. So the next time you are tempted to buy yourself those brand new dress on sale (which don’t fit your budget by the way), your freaky money senses will become active and you will be reminded to put in that money in your savings account instead, for the new car you are planning to buy.
Budget helps you prepare for emergencies. When you plan out how much of your income you want to spend, you also keep aside some part of the money for some unexpected surprises. You may start with just $10 every month, but eventually the emergency funds grow and you will not have to really worry about any life crisis flushing you into a debt crisis.
Other the fact that budgeting helps you to shape your spendings, you also become more disciplined and independent. Small savings add up over time, you learn to work on limited money, you are dedicated towards a goal, you are gradually planning for a healthy retirement and you are making the best of the money you have, while progressing to make much more.
A budget isn’t about restrictions, having a plan allows you the freedom to make purchases without guilt or regret.