Benefits of Creating a Financial Budget
For those who look over their finances and wonder why they don’t have enough to spend on the things that they want, it’s probably because they have not created a proper financial budget. While you can keep track of most expenditures in your head, there are still many other expenses, bills, and payments that you may not be considering which results in not having enough money for the things that you want or need.
Here are a few reasons why it pays to create a financial budget, both long term and short term, so you can have the money you want for the things you want to purchase without using a credit card.
Knowing Where the Money Goes
It can be quite shocking to see how your money is being spent once you make out your financial budget for the day, week, month, and year. Quite often, the small payments being made every day add up to far more than people realize. By creating a proper budget, you get to see exactly where the money is going, where it can be reduced, and how you can save up for the things that you want and need in life.
Spending Less Each Day
One simple, but very effective tip of proper financial budgeting is allocating what you need to spend during the day so you avoid paying more than you should. For example, by paying for lunch, coffee, and other small daily expenses with cash, you could keep better track of your money. This helps you to find cheaper ways of getting the same thing, like making your own coffee or bringing your own lunch.
Another useful tip is to use cash only and to allow yourself only X amount of money per week. Cash is much harder to spend than swiping the card. If you’re giving yourself a $20 allowance, give yourself a $20 bill, you’ll be less tempted to break a twenty than a five. Once you know you can spend only so much, you will automatically start to stretch out those dollars and paying attention to what your money is buying.
By prioritizing your payments, start by setting aside the mandatory bills that must be paid like utilities, electricity, and other similar bills. You’ll want to pay off debt that is costing you the least first such as credit cards and other interest bearing loans. Why do you want to pay off the lowest debt first? Because you want to be successful in paying off your debt, and feel the gratification that you can do this. It is less overwhelming to pay off a $200 debt then a $2000 debt. After you pay off one debt, snowball the money into the next smallest debt. By prioritizing with a financial budget, you can pay off debt faster and have more money for the future.
Personally, my wife and I have to thank Dave Ramsey. His financial advise and plan worked well for us. Words don’t even start to describe how wonderful it feels to be two weeks or more ahead of the game, instead of two weeks behind the game.
Saving Up for Emergencies
Did you know that short term or paycheck loan services that are mostly used for emergency payments can cost you a considerable amount of money? If you put back the money necessary to pay for vehicle repair, a small medical bill, or other emergency payment, you may save hundreds, if not thousands of dollars over the course of your life all because you avoided taking out short term loans with high interest rates. It’s much more gratifying to invest in yourself and set up an emergency fund. Then when you replenish the fund, you pay yourself back without the interest rate.
In the laws of nature Murphy is going to happen. What my wife and I have noticed by working our plan and having an emergency fund, is Murphy doesn’t come knocking on our door as often as he use to. Just as in the Laws of Attraction, when you feel and think you are always in a state of desperation for money or why even bother to save for an emergency, whenever you do, Murphy knows and comes to collect. The Law of Attraction energies are going to flow in the direction you are feeling and thinking about. Shift your thinking, you still need to save, and start to feel and think that you can have and continue to have an emergency fund. Stop giving Murphy so much power over your finances. He may still come knocking a couple of times, but you’ll start to notice it’s not as often. Besides, the budget actually allows you to watch for possible Murphy’s and include them into your plan, so they don’t threaten your financial goals.
Having More Fun in Life
Getting your finances in order brings about greater peace of mind which means that you can enjoy more things in your life. Imagine being able to pay for that trip, with cash, you’ve always want to take, buy something for your hobby, with cash, that seemed out of reach, or getting something for your spouse, kids, or family, with cash, that brings them a little happiness in their lives. Many times, once you start to control your money, instead of it controlling you, you begin to look for ways to enjoy life by spending little or no money at all. Living within your means can stimulate your creativity to draw more wealth to you when it is needed.
Our children were a little older when we started listening to Dave. I can still remember what my son said to us when we told him that we are going to follow a budget. He said “Isn’t that going to cramp your lifestyle?” Well, it’s just the opposite, a budget actually brings freedom into our lifestyle.
The benefits of creating a financial budget means that not only do you get more out of your salary, but out of your life as well.