4 Key Reasons Why You Should Budget Your Money
Making healthy financial decisions is an important part of being financially secure. One of those decisions is planning your spending. Budgeting is a very easy tool that can save you a lot of money in the long run.
Here are four things that will help you look at budgeting in a new light.
- It Helps You Keep Your Eye on The Prize
A budget helps you figure out your long-term goals and work towards them. If you just drift aimlessly through life, tossing your money at every pretty, shiny object that happens to catch your eye, how will you ever save up enough money to buy a car, put a down payment on a house or save for retirement?
A budget forces you to map out your goals, save your money, keep track of your progress, and make your dreams a reality.
- It Helps Ensure You Don’t Spend Money You Don’t Have
Far too many people spend money they don’t have – and we owe it all to credit cards. Before the age of plastic, people tended to know if they were living within their means. These days, people who overuse credit cards don’t always realize they’re overspending until they’re drowning in debt.
- It Helps Lead to a Happier Retirement
Let’s say you spend your money responsibly, follow your budget to a T, and never carry credit card debt. As important as it is to spend your money wisely, saving is also critical for your future.
A budget helps set aside a portion of your earnings each month to contribute to your IRA, 401(k) or other retirement funds, you’ll eventually build a nice nest egg.
- It Helps You Prepare for Emergencies
Life is filled with unexpected surprises, some better than others. When you get laid off, become sick or injured, it can lead to some serious financial turmoil. This is exactly why everyone needs an emergency fund.
Your budget should include an emergency fund that consists of at least six months worth of living expenses. This extra money will ensure that you don’t spiral into the depths of debt after a life crisis.
Of course, this is just the tip of the iceberg. There are countless other advantages of following a budget.
Start your expense and net worth tracking using our Peak Sample Expense and Net Worth Tracking spreadsheet.
EP 013: Track Your Expenses and Net Worth
This ten minute podcast uncovers a new spin on budgeting – expense tracking. Learn how to combine expense tracking with Gary Keller’s monthly net worth reviews, and you will be able to understand where your money is going each month, which allows you to make better decisions, which ultimately leads to fulfillment and true wealth.