Have you ever checked your bank account only to wonder where last week’s paycheck went? Opened your wallet to find a fist full of receipts and no cash? Most people put more planning into what they are going to do on the weekend than they do their financial future. Few people would go on a road trip without a map yet many people drive into their financial future without a budget. A budget is an important tool like a road map to lay a path to a freer financial feeling and a more secure financial future.
Budgets allow the user to understand how much money is coming in and going out every month. Income and expenses are important to keep track of in order to pay bills on time, make sure all expenses are covered and ideally set aside savings for emergencies, college for the kids and retirement for the future.
The questionable future of Medicare and Social Security causes people under 50 to strongly consider the need to think ahead and be prepared to take on more responsibility for their financial needs should these programs be unavailable or more restricted to them in the future.
In addition company pensions and retirement benefits continue to decrease. Retirement benefits are often not what they once were making budgeting even more essential when a person is young. Conservatively investing a portion of income monthly lays the foundation for a better financial position for later years when working may become more of a challenge.
Celebrity financial gurus like Dave Ramsey and Suze Orman have made lucrative careers from helping people get out of debt with several financial tools one of the most important being a budget. Ramsey speaks of spending money “on paper and on purpose” as a tool to financial freedom. Suze Orman has created a Budget Calculator for the Oprah Winfrey website Oprah.com as a starter budget.
It is easy to get caught up in the heat of the moment a great sale, a great item, a bad day at work leaving a sense of wanting to feel better by shopping, or those cute shoes that a girl can’t resist. We all want things and there are so many things to want and easy access to them. Without a budget it is easy with a swipe of a card to get instant gratification and a knot in the stomach later down the road when money is needed but not in the account.
Mismanagement of money can lead to poorer decisions of taking out a payday loan or other high interest temporary remedy which gets people trapped in a cycle of debt. Possible strains on personal relationships because of money can also be a result of poor fiscal planning. Late or missed payments that cannot be paid because of overspending can cause a negative hit on a person’s credit score. A poor credit score leads to more expensive money borrowing for transportation or housing, in some cases it can prevent someone from attaining employment when applying to a company that runs credit checks. A budget is a remedy to these problems when it is adhered to.
The importance of a well planned budget is clear. It allows the user to know how much they have to spend allowing them to take control and plan for a freer financial feeling and a more secure financial future.
Dave Ramsey Budget
Suze Orman Budget Calculator