If you have been following my blog, you know the importance of creating a budget and sticking to it. If you want financial security in retirement, following a strict budget is one of the best ways to achieve that goal. When you create a budget, it helps you to keep track of your incomes and expenses.If you are not convinced creating a budget is one of the ways to achieve financial security, read below for the three reasons why you need a budget.
IT HELPS PREPARE FOR EMERGENCIES
The current coronavirus pandemic has created uncertainties in many lives. Many individuals have lost their jobs and have to use savings to cover everyday expenses. When an unexpected event happens, it can lead to some serious financial crisis if you don’t have a budget.
Creating a budget allows you to save for an emergency fund. Your budget should include an emergency fund for at least three to six months worth of living expenses. I know it takes time to build a three to six-month emergency fund, but building it into your budget will make it a lot easier. Always set realistic goals and keep track of the small wins.
IT HELPS TO MAKE SURE YOU DON’T SPEND MONEY YOU DON’T HAVE
Let’s be honest when you don’t plan for something,
it is easy to spend money you do not have. You will not find yourself spending money you do not have if you create and stick to a budget.
Because of the frequent use of credit cards, it is easy to live above your means. Individuals who overuse their credit cards do not realize they are overspending until they are drowning in debt. The best way to avoid this is to create and stick to a budget and give each dollar a name. With a budget, you will know how much you make, how much you spend every month, and how much you save.
IT HELPS TO KEEP YOUR EYES ON THE BIGGER PRIZE
One of the three reasons you need a budget is to plan for future purchases. Not planning will cost you a lot of money over time. If you are looking to buy a home, allocate money each month towards the downpayment. A budget forces you to map out your goals, save your money, and track your expenses. Do you want to go on vacation, start a vacation fund, and build it into your budget? Doing so allow you to avoid spending money on items you may not need.
There are many reasons to create and stick to a budget.
Don’t wait any longer,
click here to download the
budget worksheet to get started.
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