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Why Budgets Are So Important,Now More Than Ever…

By Lauralynn Schueckler

Budgets are very important in this day and age with the struggling economy going the way it is. You may have asked yourself before “Do I really need to create a budget?” The short and simple answer is YES! We’ll list some obvious reasons why we think budgets are so important and maybe some not so obvious reasons as well.
When working with a certified budget counselor you’ll quickly learn that not all budgets are created equally or properly. It’s important to remember to:

Set Up A Realistic Budget

Budgets are usually pretty easy to create once you get the hang of it, but a little harder to actually stick to. Be honest with yourself when evaluating your true spending habits. An absolute must when creating a budget is to make sure that you’ve set obtainable goals.

If you have any receipts, copies of checks, or credit card statements from the previous months, look them over carefully and keep them handy. They can help you figure out what you’ve actually spent in the past, and they might give you some ideas on ways to “cut corners”.

Stick to That Budget

Life really isn’t about how much money you make, but more about, how you handle the money that you do make. That is where budgeting comes into play. It can be scary sometimes when you find out just how much you’ve really spent on coffee within the last year alone, but you need to know. That can be the most important step towards fixing your finances.

Eliminate impulse buying to help keep you on budget. If you set a limit to only spend $20 on gifts for friends and family, don’t spend $50 on a gift for a family member just because they spent $50 on you. Be strict and watchful when you’re shopping at the mall, boutique or online.

Keep These Points in Mind When Creating a Budget

1. Set financial goals that are reasonable and detailed. Be sure to include both short-term and long-term goals.

2. Track all of your purchases over the next few weeks so that you’ll know exactly where your money is going. Save receipts and keep everything in one place.

3. Give top priority to financial needs, and then you can consider looking at your wants.

4. Set aside a fixed amount for your savings or emergency fund every month. Its okay to start small ($5-$10 per month), and then work your way up.

5. Make sure that you’ve created a budget plan that you can live with. If things seem too tight or if you find that you have too much money left over each month, revisit your budget and find ways to make cut-backs or start a “rainy day” fund or a retirement fund.

6. Limit your debt payments to 15-20% of your net income each month. We want you to get out of debt as quickly as possible, but if you put all of your money towards paying off debt and you don’t have an emergency fund, you could fall into even more debt if something unexpected comes up.

Lauralynn Schueckler is the Online Marketing Specialist at Advantage Credit Counseling Service. She is the author for Advantage CCS’s Blog called Dollars & Sense. Advantage Credit Counseling Service is a member of the National Foundation for Credit Counseling. Contact Advantage Credit Counseling at 866.699.2227, or visit them online at www.advantageccs.org.

Views expressed are the personal views of the author, and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.

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