More often than not, most of us pay little attention to how we are managing our money until we are planning a big purchase or investment. Most of us live day to day spending our hard earned dollars without really thinking about whether or not we are doing so, wisely. Unfortunately, this can be a very financially vulnerable way to live. Instead, we should all learn how to be prepared to meet the many unexpected situations and opportunities in life. This is why developing a budget is fundamentally important.
Why You Need a Budget
Why You Need a Budget
Some may question why there is a need to set a budget for yourself if you are not planning on making a big purchase or investment. The answer is simple. No one can predict the future, which means that you have no idea what great or terrible situation is coming down the pike. Good or bad, it's best to be financially ready. If you are in a car accident, you may need extra funds to pay the insurance deductible. Conversely, you may find the perfect sofa sectional on sale and decide you want to buy it. Whatever the situation, it's a good idea to have some financial cushion to meet both the fortunate and unfortunate surprises that may come your way.
How to Get Started
Start the process by making a list of everything you spend within a month's time, then sort your spending by category. Take a look at your spending and decide which areas could use some cutbacks. Based upon your findings, set spending limits for the following month. Keep up with every dime you spend by using categories. It is best to learn how to use a spreadsheet or download one that has already been made to help keep track of everything. These are very simple and straightforward methods that anyone who plans a budget can practice.
Pay Attention to Irregular Expenses
One true money zapper is irregular expenses. These are expenses that are usually unanticipated and not a part of your normal monthly spending. It may be difficult but try to the best of your ability to anticipate these sneaky little expenses. Having these money drainers hanging around your budget is like having a hole in your wallet: money just seems to fall out at the most unexpected times, it may even feel as if you need a private debt investor.
Say goodbye to blind spending by developing a simple budget and sticking to it. You will find that your pockets become much heavier from all the money you will be able to save. A frugal spender is always financially fit.