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Importance of Budgeting

Handling your money can seem simple.  Don’t spend more than you bring in. But sometimes life doesn’t follow the same routine, you find it’s hard to afford larger essential purchases, or you don’t realize how much you’re spending!  It’s time to discuss the importance of budgeting and why you should create your own!

Keep Spending in Check

Budgeting can keep your spending in check.  It can be hard to understand how much money can be used for different expenses without breaking down where your money goes each month.  Ideally, you want your spending to align with our percentages below.  If you are overspending in one of the categories, it might be time to consider changes!

Have Goals, Don’t “Wing It”

Everyone should have goals they strive to accomplish.  Even if you feel content in all areas of your life, setting the most minor goals to work on helps you improve and look forward to something.  The same can be said for your finances!  Whether your goal is to buy a house, improve your credit score, or even start depositing into your savings account, set a goal to reach and a plan for achieving it.  You’ll find it much easier and less mentally taxing than trying to improve your finances on the fly.

Time to Review?

After having taken the time to create and review your budget, maybe you’ve realized it’s time for some changes! The most manageable changes are usually unnecessary subscriptions, personal spending, and taking advantage of sales and specials.  However, you might also find that your current housing or transportation bills are too high for your income, and it might be time to plan some changes to better fit your budget.  While making these changes can be easier said than done, it’s still wise to review all aspects of your budget and see where you can free up some much-needed space.

Stick to the Budget

So maybe you’ve looked over your income and subtracted your bills and other recurring expenses but still struggle to keep your account afloat.  If so, your problem might be sticking to your budget in certain areas!  This can often be the case for anything that varies in price each time you purchase, such as groceries and “want” items.  A couple of great ways to combat this include using cash more often.  Paying with a card allows you to spend more than you can, as you can physically see how much money you have left.  With cash, unless you revisit an ATM or receive more somehow, what you have is the maximum amount you can use!  Another option could be a second checking account, preferably one that offers rewards for use, that you use solely for these purchases. In contrast, your primary account is used for monthly bills and nothing more.  Just be sure to transfer no larger than your budgeted amount between accounts and stick to it!

The importance of a budget can’t be overstated.  While you might think you have a handle on your finances, reviewing them and seeing where you can improve is never a bad idea.  Many free tools are available to help you create the ideal budget and many ways to help you stay within it.  Take the first step in creating one and experience the difference it will make for yourself!