You don’t have to be a financial kingpin to benefit from personal budgets. Whether you are a single individual with no debt or someone who has multiple investments, everyone can benefit from creating and maintaining a budget. In fact, the sooner you start managing your finances according to a budget, the sooner you will find financial success, regardless of how much money you earn.
Many people don’t create a budget until they find themselves in financial trouble but the time to create a financial plan is long before trouble rears its ugly head. However, even if you have waited until money is so tight you aren’t sure how you will pay your bills, it is still better to live by a budget.
Far from being constraining, personal budgets are actually freeing because by paying attention to where your money is going, you will find that you are much more careful about letting go of your money. You may begin to question whether certain expenditures are really necessary and you will quickly find that by saying no to a plethora of small, but inconsequential purchases, you will have the money for the more important ones.
Most experts advise that before you even try to make a budget that you spend about a month writing down everything you spend so you will have an idea of where your money is truly going. This is helpful for two reasons. One, it helps alert you to patterns of impulse spending or overspending and two, it shows you how much you are truly spending for the things you need. It would be difficult to budget a certain amount for each category of spending unless you have some idea of how much you will need. However, even after you have created your budget, you will still need to keep track of your spending so you will know whether or not your budget is on target. Also, be prepared to make changes, especially in the beginning.
While many budgets look great on paper, the reality is that most of the time, you will need to make changes until you get a clear picture of exactly how much money is coming in and how much is going out. Don’t forget to budget for one time expenses as well as expenses that occur once a year, such as car registration and income taxes. By committing to live by personal budgets, most people find that they spend less and save more money, which allows them to get the things they truly want and need.