Let’s look at some methods budgeting can help you attain your goals. A good budget will help you do the following:
Plan short, medium and long-term target.
A budget will help you plan for short-term expenses, like your monthly bills, and medium-term expenses, like vacations, as well as long-term expenses, like buying a car or a house, paying for a child’s college education and putting money away for retirement. Get a notebook to write on how much money you expect to make over the next few months, how much of that money goes out every month and how much you left to save each month. By doing this, you will always know when you need to cut back on spending, when you can afford to loosen the reins and how long it will take to save up for major goals.
Set emergency fund.
Say, a significant expense arises unexpectedly. How would you address it? How can a budget help you handle the said significant expense?
If you are new to budgeting and do not have any emergency savings yet, or if your savings have already been depleted by another recent emergency, your budget will help you determine what expenses you might be able to postpone or shift around to help you pay the unexpected bill. Maybe you cut your next month’s grocery bill from 1,500 to 1,000. Or else, go out to eat once in a month instead of once every week.
Get the Most Out of Your Money.
Chances are you spend at least 40 hours working each week, and that doesn’t include the time you spend getting ready, the time you’re forced to be away from home because of commuting and lunch time, or the hours of free time that get lost because you’re too tired from working all day to enjoy them. If you’re going to dedicate that much of your life to earning a living, you owe it to yourself to make sure your money is going to the things that are most important to you. A budget helps you track all your expenses – large and small.
Plan for Major Changes.
As mentioned earlier, a budget lets you model in advance how a major purchase or life change will affect your finances. Instead of wondering if you can afford a house or panicking about whether you and your spouse can afford to live on one income while the other stays home to raise a child, you’ll have the data you need to crunch the numbers. You’ll find out before you make any change whether you can afford it and what sacrifices you might need to make.
Having Money in the Bank, Cooperatives, or any investment houses.
By helping you sock away money each month, budgeting is an important tool for achieving financial freedom. The ultimate freedom, of course, is being able to retire, but along that winding road are opportunities for many rest stops if you have money in the bank, cooperatives, and or any investment houses.
Budgeting is not just for poor people or for times when money is tight or your life is undergoing a major transition. Budgeting is for everyone because it makes it easier to achieve financial goals of all shapes and sizes, whether that goal is to stay out of debt next month or to pay cash for a new car. It also allows you to make long- and short-term projections about your financial situation, prevent crises, get the most out of your money, plan for major life changes and enjoy peace of mind.
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(The writers are both Wealth Analysts of a reputable Financial Company and are both active Licensed Real Estate Practitioners. They also engage in Stock Market Investing. For suggestions and more details, you may contact them with CP # 0919-376-2922 or Tel.No. (074) 244-4026.)
