Oh no…not the ‘B’ word! I admit, for years I knew I needed a –gulp– budget, but I put it off. I’m so glad I finally sat down with my spouse to crunch the numbers and set realistic goals. Budgeting might seem overwhelming, but it’s key to your financial health. Here are four big reasons why you should sit down and set up a budget, today.
Live within your means and get out of debt
A budget makes it clear exactly how much money you really have, and how much you need to cover expenses. If you don’t have enough to cover expenses, a budget can help you see how you can decrease spending. Knowing how much money you have to spend and sticking to a budget can help you resist getting into credit card debt to cover unexpected shortfalls. Americans collectively owe more than $1 trillion in credit card debt, an all-time high. It’s easy to fall into the trap, but planning can help you steer clear.
Be prepared for emergencies
An important part of any budget is savings. I know, it’s hard to save when we’re busy paying bills, buying groceries and taking care of our kids. It’s important to save something, though, even if it’s $20 each paycheck. Building an emergency fund will help you to be prepared when unexpected expenses arise, so you won’t be tempted to use credit cards or take loans—both of which dig you in deeper with monthly payments that spread your income even thinner.
Focus on big goals
Setting up a budget is a good way to focus in on what matters to you. Short-term goals could include a newer vehicle or a family vacation. Long-term goals might include education for your children or money for retirement. Thinking about the big picture can help us put impulse buys into perspective. For me, giving up weekly visits to the coffee shop and trips through the drive-thru helped save me a lot—I was spending more money than I care to admit, because I did it $5 at a time and it didn’t seem like a big deal. Looking closely at your unnecessary expenses with an eye on bigger prizes can help motivate you to spend smart.
Find Peace of Mind
There are few things more stressful than the out of control feeling of not being able to make ends meet. Have you ever made a credit card payment, so that you could use that credit card to put gas in your car? Being in debt is a vicious cycle that keeps getting worse from month to month. If you find yourself struggling, a budget can help you take control and calm your nerves.
You don’t have to go it alone. Check out your library for common sense guides to living on a budget while still enjoying your life. Or contact Housing and Credit Counseling Inc., a local nonprofit organization dedicated to helping consumers, for a free appointment with an expert. Take a deep breath and take control of your money with both hands.