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How Do I Create A Budget?
They say ignorance is bliss, but it doesn’t hold true for your finances. Being in the dark about your spending is one of the worst financial habits you can have. If you don’t smarten up, you could be in store for a nasty surprise. Not convinced? Here are four reasons why starting a budget right now will help you understand your finances better.
If you have horrible spending habits, having a budget is the best way to manage your personal finances.
What Is The Main Purpose of A Budget?
The main purpose of a budget is basically for you to have an overview of what monies are coming in and what is going out. This will ensure you are not spending more money than you should be spending.
By knowing exactly what your cash flow is, you will be in a better position to make good money decision. That is why starting a budget is crucial.
Before we look into the reasons why starting a budget is crucial to your financial situation and why setting up a budget for the first time may feel overwhelming but doable, we would first love for you to like our growing Facebook page right here! Be sure to follow us on Instagram here.
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If you are ready to take control over your financials then it’s definitely time you think about starting a budget.
It’s the best way to understand where you stand financially, you can take control of any debt you have and you can start a proper saving plan.
With the right budgeting plan, you can be well on your way to financial freedom.
Setting up a budget for the first time is one task many people avoid for the longest time. Is time to work on and create a budget? Let’s find out:
1// You Live Paycheck to Paycheck
According to CBS News’ Money Watch, 8 out of 10 Americans live paycheck to paycheck. These stats come from a CareerBuilder survey that polled 3,500 full-time employees and 2,400 hiring and human resource managers in 2017.
Their findings show most respondents are in a fragile financial situation, even if they’re taking home 6-digit incomes.
Don’t let these stats normalize this living situation.
Though most Americans do it, living paycheck to paycheck is an impulsive way to manage your money. If one missed paycheck could spell disaster for your finances, then it’s time you think about starting a budget.
If you are living on a tight budget, then you should definitely consider starting a budget today!
2// You can’t trace where your money goes
You work at least 40 hours a week — sometimes more — and hold two separate jobs, so it’s not that you aren’t making money. You even have the proof in pay stubs and deposit slips. The issue lies in how you’re spending it. You’re spending habits are careless, so you can’t say for certain where your money goes.
What you do know is that your wallet and bank accounts are empty, and you have nothing worthwhile to show for your reckless spending.
Starting a budget will help you determine where all your money is going month to month.
If cash slips through your fingers like sand, and you swipe through credit like it’s your job, it’s time you consider starting a budget. This financial document will help you track each dollar, so you always know how you’re spending your money.
3// You have no savings
Regardless of your age, needs, or wants, savings are an essential facet of your finances. They can help you do something as simple as buying a new washing machine to something as complicated as preparing for your retirement.
This is the most important reason for starting a budget.
Living without savings will be a minor inconvenience at first. You won’t be able to cover short-term bills or repairs on your own. Though annoying, these bills are relatively simple to cover when you know you can get your payday loan online.
Online lenders like Money Key have moved the borrowing experience away from traditional bank branches to your laptop or smartphone. In the move, they’ve eliminated many of the barriers stopping you from finding payday loans for urgent bills.
That means you can have quick solutions as soon as an emergency tests your finances. Even with short-term solutions, it is important you fix your financial life by starting a budget plan.
However, over time, your lack of savings will affect your finances in greater ways. Without savings, you won’t be able to take a long vacation or contribute to an IRA—the latter of which will impact when (or even if) you can retire.
If you don’t have any savings to your name, it’s time you use a budget to help make them.
We can’t stress enough why starting a budget is important in this day and age. And although setting up a budget for the first time can seem scary, it is essential in helping you plan a better future money wise.
Your bills scare you
It’s normal to dislike opening bills. Few people enjoy being reminded they owe companies money. However, if you avoid your mailbox for fear of finding a bill from your credit card company, your cowardly ways suggest you have a problem.
Starting a budget today will give you the peace of mind you need.
When you’re spending within your limits, you shouldn’t be afraid to open your bills and face what you owe. It’s another story when you’re overextending yourself; bills reveal just how much you owe compared to how little cash you have to pay them off.
In which case, you need a budget to help you take control of your finances. And starting a budget right away will help you in the long run.
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It takes only one
Don’t assume you’re in the clear if most of these situations don’t resonate with you. If just one of these signs reflects your financial habits, this alone is proof that you need to reconsider how you manage your money and that starting a budget should be your next step.
A budget is just the tool for the job. To make it, you have to take stock of every dollar coming in and out of your hands in a way that forces you to face your financial situation as a spendthrift. Setting up a budget for the first time will open your eyes to where your money is coming from and where it is going.
Despite what financial guru, Dave Bach, claims, you can’t always blame a bad financial situation on the Latte factor. Bach’s money-saving strategy points the finger at small purchases made throughout your day, claiming they’re the reason why you come home with no cash in your wallet.
While this is true of some people’s habits, it doesn’t work for those who have no small daily purchases to eliminate. If your budget shows you how little you make compared to your fixed costs, it suggests you need to increase your wealth with a new job or side hustle.
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Starting a Budget
You won’t know where you fall on the spectrum until you’ve tabled a budget, so make a promise one weeknight or weekend to look at your finances. Starting a budget is the only way you can take full control of your money. If you don’t know how to make one, don’t let that stop you.
A huge resource of information is available at your fingertips. Just use Google to find more information about starting a budget and how to create one. It will bring up the best tips available, including hacks, and guides to help you budget better.
You can also visit websites like NerdWallet and Wisebread to help you get started.
What’s important isn’t how you make your budget. What’s important is that you have one. Setting up a budget for the first time can be daunting but starting a budget will be the best decision you would have ever made.
Whether you make it with the help of online guides or a money management app, it amounts to the same thing. A budget is a light in the dark, shining awareness on your financial ignorance. Once you’re aware of how you spend your money, you have a better chance of taking control of your money.
Be sure to download your FREE monthly budget template worksheets (download this budget template) and then work on your saving goals.
And there you have it, four crucial reasons why starting a budget is essential and why setting up a budget for the first time is the right step in the right direction. Do you already have a budget that you follow? Tell us in the comments below.
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