Being on a budget sounds about as
fun as being on a diet. The definition of a budget is an
estimate, often itemized, of expected income and expense for a
given period in the future. The definition of a diet is food and
drink considered in terms of its qualities, composition, and its
effects on health. Boring, who wants to sign up? But both
budgets and diets have gotten a bad rap. Below are ten reasons
to be on a budget. Surely one or two will resonate with you.
Take some time to set up a budget for the new year and enjoy the
benefits!10. A budget
shows all your sources of income. This includes jobs, tips,
bonuses and child support. The first thing any budgeter will
tell you is you have to know what is coming in. Gather your
sources of income and list them. Add them up. You may be
surprise at the amount you have coming in each month.
9. All your expenditures are
listed. How much are you spending each month? This includes
cash, check and credit card charges. Gather all your
expenditures. Do not forget those periodic costs that you pay
quarterly or yearly. List these on the same page that you have
your sources of income. Add these up. You are doing great if you
have a positive number left!
8. Create a plan to reduce and
eliminate debt. If you do find that your expenditures are more
than your income, that's ok. Now you know how much and can
create a plan. You can contact those you owe and let them know
your plan. They may be able to help you reduce your debt faster.
7. Categories let you know how
much you to spend on necessities. Group your expenses by
category. Put your household items together, put car and other
modes of transportation in another, be sure to have a category
for medical, savings and entertainment as well. Divide up your
income across these categories. Don't spend more money than you
have in the category.
6. Balance your debt reduction
plan with an entertainment/fun category for you and your kids,
to chillax. As you pay down your debt, don't put your life on
hold. You may have to find some creative ways to have fun is you
have a lot of debt. Approach it in a way that makes the
challenge fun. For instance, take a 5 or 10 dollar bill and ask
your kids how many different ways they can come up with for the
family to have fun on this amount of money. Write them down and
then make plans to do them. There also lots of events around
town that have no cost at all. You will find them if you look.
5. Savings plan for unexpected
events and/or big items like cars, house and trips. Now that you
have a budget, you can set money aside for bigger things. Nobody
ever plans for accidents or illness, but they do happen. So know
that the savings category is for these events. Just in case.
Then there are down payments for a home or a new car. Or car
repair. You can use this category for trips if you like to
travel.
4. Plan for the future, put
money aside for 401K, and or IRA's. The cost of living goes up
as you get older. Make sure you have a category for when you
want to slow down and enjoy a bit. If you have an employer who
matches your contributions, take advantage of this benefit.
Otherwise, it's like leaving money on the table. The sooner you
set this up in your budget, the longer the money has to grow.
Teach your children to do this as soon as they start earning
money.
3. Have money for college and
other big dreams. Do you want your kids to go to college? Do you
want to go to college? What dreams do you have you thought were
impossible to achieve? Now that you have a budget, you can put a
category for your dreams. It might take a bit but isn't later
better than never?
2. Creates an environment to
allow for more choices. Being on a budget allows you to be ready
for opportunities as they arise. A lot of people are in a
financial bind right now. But not everyone. Those who have been
on a budget, are able to pick up some great bargains right now.
Wouldn't you like to be one of those people?
And the number 1 reason to have
a budget is...
1. Peace of mind. Don't you and
your family deserve it? Knowing that you've created a plan and
are following it, will let you sleep at night. You won't have to
worry about if you have enough. You know you do.
