To become financially sound, it is important you develop a personal budget for your spending, income and savings. Accounting for each dollar before it is spent by using a budget is the most effective way to curb unnecessary spending and reach your financial goals.
There are many reasons for keeping a personal budget, but here is our top 10 list of reasons to keep one:
1. A personal budget can help you reduce your debt or get out of debt altogether. By budgeting for your expenses, you free up money from spending areas. That newly found money can then be applied toward debt.
2. A personal budget lets you save for something you need or want. Contrary to the conception that many people have about budgets, that they are restrictive and difficult to work with, many people find that by keeping a personal budget, they allow themselves to think ahead and plan for future purchases.
3. A personal budget is a guide to financial freedom. A budget tells you where you have been and where you are going when it comes to your financial life. It gives you a sense of control over your financial life and helps you plan for the future.
4. A personal budget helps to increase personal savings accounts. If you find that you have a hard time saving money, putting money aside for retirement or college, or having an emergency fund, a budget can give you the means to do all of these things.
5. A personal budget gives you control over your money, instead of feeling like your money controls you.
6. You can find out rather quickly if you are living within your means. Before everyone used credit cards, it was easy for us to know if we were living within our means because we used cash for everything. But once credit cards became the way to pay, it became harder and harder for people to know if they were living within their means, or well beyond them.
7. Keeping a personal budget can help your relationships. If you and your spouse often fight about money, working on a budget together helps you both feel as if you are on the same page working toward shared financial goals. That will help your marriage stay strong as you work together to reduce debt, build savings and make a better financial life.
8. A personal budget reveals to you areas in which you are spending too much money. You might not even be aware of where you are spending too much money, but as you budget your expenses, keep an eye on where you money goes and record everything, you will see where the leak is and you will feel better prepared to patch it.
9. If you are currently restrictive with yourself and you think you cannot afford any extras, a personal budget might reveal to you money you did not know you had. In other words, you might find you can afford to budget in a movie and dinner once a month, or you can indulge your love of magazines by buying a few every month. Whatever it is, a personal budget can help you feel empowered to not only save, but selectively spend your money.
10. A personal budget is like a ticket to financial freedom, allowing you to save, spend and plan for the future. Contrary to the notion that it is restrictive, it actually frees people up to live their lives without worrying about money.