How often have you felt that if you had only $100 more this month, you could have easily addressed your car troubles or attended a certain friend’s birthday at a swanky restaurant?
If you had budgeted for your expenses over the next quarter, you would not have to see this day. It seems quite practical yet many loathe it and so budgeting takes a back seat despite its vital role in everyday life. It is fairly easy and essential to budget at the personal level and a steady budgeting habit can provide for long-term projections that permit big purchases, important investments and more. In fact, if you are considering buying a car or home, it is your budgeting habits that come to the rescue when time comes to commit to that upfront down payment.
And what happens when you do not have the finances to meet those commitments? You put away those goals for another day and time when you think you will have the money. But if you do not budget, where is that money coming from? So many people run around in circles hoping the situation will sort itself out when all along the answer lies with you – and your budget.
When you take the time and put in the effort to budget, those big purchases don’t seem so big anymore and every penny you put down makes the experience of that purchase much more satisfying, given the fact that not only is this hard earned money but also long saved. A simple first step is looking at your bank accounts and reviewing the different debits and credits you see. Many people don’t even look at bank accounts on a monthly basis and are stunned at the fees they paid over the past year for not maintaining a minimum balance.
Bank accounts today are very easy to comprehend. Take a few minutes to look at yours, understand what the different categories are and where your money is going to or coming from, ensure there are no dubious charges. Random numbers make no sense but when you see what categories they belong to and can relate that to your income and expenses then you are now looking at this as information.
This information will help you budget. This information will show you the best use of your money and how to value it. And it is money that you will need to use to be able to afford the lifestyle you want. Now you see how your budgeting efforts make your life easier?
Whether you are considering your everyday bills – gas, rent, utilities, groceries, or a sudden emergency – health, unemployment, penalties, etc., budgeting is critical so you can address financial requirements with ease. If you take the necessary steps to manage your finances, you can address any situation head-on. Simply earning a regular paycheck is not enough. You have to also learn how to reduce your expenses where you can and stay away from debt if possible.
Knowing exactly where you stand financially is a great asset. You could guess a ballpark figure but how is that going to help? A pilot would lose his job if he did not calculate his exact landing spot. A doctor would be sued if he did not weigh his options before operating on a patient. Your finances are your lifesaver. Plan for it.
Irrespective of income, you should always be aware of your fixed and variable expenses. You can be proactive and keep track of every transaction in your own way – many use spreadsheets to do this manually. You can also accept the friendly hand extended by technology in the form of online banking. Start with one month. And then work your way through the rest of your bank statements. It might initially seem like a Herculean task but eventually you will be glad you undertook the challenge.
I have addressed more in-depth techniques, deciphered financial terms, and provided as simple an understanding and approach to budgeting as possible in my new book ‘Budgeting is More Liberation than Limitation’, available now online through Amazon.