The Reasons Why a Budget Matters Articles | Personal Finance

By: Guy Starbuck

Think about setting off on a cross-country journey with no itinerary, no maps, no money and no source of help. The idea might seem exciting and pleasant but think of what would probably happen if you happened to have an emergency along the way. Living your life without a budget is just like that car trip. It sure seems easy to buy what you want when you want and use your credit card like a magic wand but what are you going to do when something really bad happens. Would you end up in serious trouble if your income suddenly stopped due to certain circumstances such as layoffs or a change of careers? Something else such as a new child on the way or house repairs may also leave you in dire circumstances as well.

Budgets are otherwise known as spending plans. They are a plan for the way your money is handled and they prepare you for the eventualities of life and all things expected and unexpected. However, a lot of people hate thinking about budgets because they see budgets as a limitation on their lives and what they can and can’t do. People who make the right financial plans are aware that this isn’t the real case. A good budget can be used to ensure financial security and it also gives people the freedom to spend their money on anything.

Think of if that insurance bill came along and you were aware that you had the entire amount budgeted for and you were ready to pay it. Does this sound like wishful thinking? It really doesn’t have to be, setting a budget can make this a reality for you.

1: Following a Realistic Budget Helps Free Up Cash for the Fun Stuff.

Budgets aren’t about denying you what you feel is important to you. It’s about stopping you from wasting funds on things which you may not need and which tend to add up. You’d be surprised at how much you can save by making the right budget and keeping your expenses reasonable.

2: A Budget Helps You Prepare For Emergencies.

It’s Murphy’s Law. Something somewhere is going to happen when you least expect it. Things break down, emergencies happen and you never know what to expect. How prepared are you for such eventualities. A budget allows you to know where your money is going and helps you prepare for such emergencies.

3: A Budget Can Both Get You Out of Debt; and Keep You Out Of Debt.

Owing money is a big problem in America and if you haven’t been reading the news, it’s been cited as one of the primary reasons for divorce in the country today. Creating a budget will not only get you out of debt, it will keep you out of debt and teach your family members to do the same too.

4: Budgets Teach Responsibility.

Instant gratification is a sign of irresponsibility and unfortunately the media and advertising espouse it every day. It may seem convenient to forget about responsibilities and spend without thinking about the consequences but reality is always important and then sooner you learn that the better. Budgets make you a much more responsible person.