It’s easy to assume everything’s OK – when you avoid it.
Take for instance your annual physical. By postponing your appointment, you won’t be told to eat better, lose weight or quit smoking. You can just assume you’re in tip top condition. However, as you’re aware, many diseases don’t always inflict massive pain. There might be something going on inside you placing yourself in a life-threatening situation.
The same can be said about creating a budget.
Many Americans refuse to create a budget and certainly don't want to follow a budget. And why should they? They
have a job where they get paid on a consistent basis. Therefore, there’s always money in the account – right?
For many American consumers the biggest concern about creating a budget is the possibility of having to alter their lifestyle. They like their $4.00 coffees in the morning and, perhaps, another in the afternoon. They want the best cable package money can buy (even if they only watch 3 out of the 200 channels they have available to them). Or, they prefer to go out to eat because it's better than cooking and cleaning up the mess later.
Although money is coming in, what many people don't realize is the amount of stress and lost opportunities which result from overspending.
If they really knew what they were spending their money on, they would also realize how much they could have been putting away for bigger items, extravagant vacations or a larger retirement fund.
Here are 5 compelling reasons for creating a budget:
- REDUCES ANXIETY. How much do you make compared to how much you spend? If you know where each dime is being spent, you’ll know your limitations. No concerns about overdrawing your account.
- PUTS YOU IN CONTROL. Once you know your limits, you get to choose how your money is spent outside of your required monthly expenses. Plus, a budget gives you an idea how much debt you can take on. If you should need to make an expensive purchase, which requires making monthly payments, you’ll be able to determine if your budget has the money to finance it and have an idea when it will be paid take.
- SAVE FOR BIGGER / BETTER THINGS. Point #2 helps you determine what you can save. When you begin saving, you begin working towards some of the finer things in life (car, furniture, home improvements, or vacations). Creating a budget can also show you where you need to cut expenses and if you need to make additional income to meet your future goals.
- HELP WHEN YOU NEED IT. A budget should also include an “Emergency Fund”. Once you’re able to save a comfortable amount ($1,000 or more), you’ll be prepared to handle unexpected expenses (car repairs, increase in house payment, re-shingling your roof, or paying deductibles).
- FOCUS ON A BRIGHTER FUTURE. Creating a budget will show you exactly what you need to do in order to reach your ideal future goals. Not just making bigger purchases, but also in terms of better funding your retirement.
So, the first step towards a better financial future is creating a budget that helps you track and control your money better.
Creating a budget will help you see where your money is being spent and identify areas where you can make adjustments. Once your budget is figured, the next step is determining what to do with the excess cash saved.
Instead of assuming the money will just BE THERE, why not put a budget together and start planning for a more stable and happier financial future. Eliminating some of the temporary pleasures today will pay dividends in the future.