What Is Budgeting And Why Is It Important

Budgeting is primarily a plan to spend and save your money efficiently. It gives you the chance to decide in advance how much money you have and where can you spend it. The planning can help you prioritize your needs accordingly. Making a budget does not mean that your life would become tension free but it is a hedge against future risks. It allows you to keep some cash aside for emergency situations. It helps in making you stay aware of how much you have. It is not difficult to create a budget; you need some time, peace and a realistic mindset when forming one. Let’s look at why is budgeting so important.

Instructions

  • 1

    Whether you are single or running a family, finances play a big role in your life. In times like these with job insecurity, high recession and inflation ones need to have a budget. It will help in keeping the money regulated and you will not wake up one day realizing that you have none left.  It is not only used to save money but to distribute it on different requirements. You can decide how much you will need on food, clothes, luxuries besides the fixed payments.

  • 2

    A budget can be made weekly, monthly or once a year. A weekly budget will keep you updated about your daily spending and you can keep a check on it this way.  Monthly budget lists down the bills that are to be paid and the major expenses like grocery shopping every month. With the help of a yearly budget, you can see how much you have saved each month and what has been your consumption pattern.

  • 3

    Budget plays a big role in planning for the future. some people have the habit of spending money just as they get it, if you budget your money it will give you a chance to decide on major investments for the future. For example you plan on buying a car’ a budget will tell you how much to save each month so that you have enough by that time and this way you will not overspend.

  • 4

    Budgeting also decreases tension on daily basis. You will not be looking at your wallet and dreading that the month just started and you have nothing left. It will let you have a smooth month if you stick by the budget, many people are successful in making one but rarely follow it so good luck.

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