Every once in a while, it just makes sense to go back to the basics, which in finances involves budgeting. Businesses use budgets and so should you in your personal home finances.
But sometimes budgeting is made so complicated that we dread the thought. I am going to break it down a little to make it easier to understand and hopefully in doing so, you will understand why you need it.
A budget is simply a list of your expenses and your income. By detailing these expenses, you get to see how much you are spending versus how much that you are making.
There are a few reasons to keep a budget. First, even if you update your checkbook on a regular basis, it can be hard to see your whole financial picture. A budget can show you where you are spending your money and help you to determine if you are spending it in areas that you should not be.
Second, a budget can show you if you simply are not making enough money and if you are running a deficit every month.
Third, a budget allows you to set allowable amounts for certain discretionary expenses, like travel, entertainment, dining out, purchases, etc.
And finally, a budget flows with you and can change and be altered over time and as needed, so it is continually useful and applicable.
Even though a budget can feel restrictive, it is actually a means for you to gain control over your financial situation (remember yesterday?s post about numbers?). Embrace it and enjoy the order that a budget can bring.
For an easy way to learn about budgeting, check out this recent LearnVest article entitled Budgeting 101.
Source: http://blogs.ideasforwomen.com/blogs/money/2012/08/budgeting-for-dummies/
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