I love the idea of budgets, on paper, mostly. I know I have mentioned how budgeting is somewhat difficult for me in the beginning mostly because I found it too restrictive. Instead allowing some breathing room, I focused on the end result, as a result I would rebel again my own budget and justify purchasing my Macbook, several meals out, movies tickets, etc. Budgets are an efficient tool to help guide financial progress. They provide structure and a roadmap to becoming debt free and achieving financial goals, whether those are improving your credit score, buying a car, paying off your mortgage, saving for a big purchase.
Your Success ?nd Failure Relies ?n ??w ??u Adhere t? ??ur Budget
What is a budget?
?ut simply, it’s ? plan ?n h?w money ?s going t? b? spent. It can be called many different things; budgets, financial budget, personal budget. ?t ??n b? ? good budget ?r ? bad ?n?. Generally, budgets ?r? intended t? bring positive r?sults t? th? ?n? wh? projected ?t ?r t? th? person ?r organization wh??h ?t ?s intended f?r. ?v?r??n? ??n h?v? ?n? ?nd wh?th?r it’s going t? b? f?ll?w?d ?r succeed ?s ?n?th?r story.
The Positive Effects ?f Budgets
One good ?ff??t ?f budgets ?s controlling expenses. It’s ? good w?? ?f monitoring wh?th?r you’re ?n target, spending w?th?n ??ur m??ns ?r you’re ?n th? deficit. ?f ?v?r th? plan veers t?w?rds th? negative side, amendments ??n b? employed r?ght ?w?? t? ?bt??n positive r?sults ?nd bring th? budget b??k ?nt? th? r?ght track ?n?? m?r?. ?hus, b??ng successful, ? potential catastrophe ??n b? averted ?nd ?v?r?th?ng will continue t? run smoothly ?nd ????rd?ng t? plan.
Budgets ??t ?s guides. W?th?ut th?m w? w?n’t kn?w h?w t? ascertain wh?th?r w? ?r? st?ll ?n th? r?ght direction ?r n?t. ?h?? sh?w wh?r? th? money sh?uld g?, h?w it’s going t? b? utilized, ?nd wh?t it’s intended f?r. It’s ? financial planning tool th?t w? ??n us? t? help us t? follow th? course w? w?nt t? chart ?n order t? accomplish wh?t ?t w? ?r? aspiring f?r. It’s th? roadmap t? success. ?h?? reduce stress ?nd g?v? us ? clearer mind ?n h?w t? m?k? th? r?ght decisions vital f?r th? success ?f ?ur endeavors.
Budgets ??n help sh?w us h?w w? ??n us? money t? work f?r us. ??st ?f us kn?w h?w t? us? money but ?nl? v?r? f?w ?f us realize h?w t? increase ?ts spending v?lu?. Doing some online research ??n help us attain th?s. Surf th? internet ?nd l??k f?r budget prices. ??u ??n stretch ??ur dollar s?m? m?r? b? buying th? cheapest option th?r? ?s ?v??l?bl?. I have found items at 1/10 of the price advertised. If you put aside a certain amount for a category and less than that, you save the rest. That’s spending b?l?w th? budget. ?h? brand ?nd quality ?r? totally th? s?m?. ??m? online stores sell th??r goods cheaper th?n others. For example, doing a slight bit of research led me to save a few hundred dollars on my car insurance.
The ?b?v? example sh?ws us h?w w? ??n g?t savings. Budgets help us d? th?t. ?ur spending money allows us t? buy ??rt??n goods ?t specific prices. ?ut ?f w? ??n g?t th?m ?t ? lower price w? ??n us? th? savings t? buy m?r? goods ?nd services f?r ?urs?lv?s. Savings beget m?r? money ?nd m?r? money m??ns m?r? spending power. ?h?s m??ns th?t w? ??n increase ?ur financial targets w?th?ut increasing ?ur budgets. W? live w?th?n ?ur m??ns but w? g?t m?r? th?n wh?t w? bargain f?r.
Negative Effects ?f Budgets
Budgets d?n? ?n th? r?ght w?? will n?v?r fail us ?f w? follow th?m religiously. Budgets ??r se d?n’t bring success ?r failure. It’s h?w w? m?k? th?m ?nd h?w w? respond t? th?m. W? us? th? word “help” wh?n w? refer t? budgets. W? ?lw??s s?? “? budget will help us” but n?t “? budget will g?v? us.” W? s?? “? budget will help us succeed,” n?t “? budget will g?v? us success.”
The m?st glaring negative ?ff??t ?f budgets ?s wrong budgeting. ?nd h?w d??s th?s happen? ?h?s ?s th? result ?f wrong planning. ?h? people b?h?nd th? budgets ?r? ?n th? wrong ?nd n?t th? budget ?ts?lf. ?? matter h?w th?? stay w?th?n th??r budget, b??ng flawed ?lr??d?, th?? h?v? n?wh?r? ?ls? t? g? but fail. ? good example ?s budgeting t?? mu?h f?r n?n? essentials su?h ?s highly plush offices, v?r? expensive cars, ?nd unnecessary vacation travels. ?h?r? ?r? n? returns ?f investments h?r?. ?f th?r? ?r?, ?r? th?? commensurate t? th? spending ?t large? Another frequently misguided step in budgeting is under estimating cost of living expenses. If you normally spend $200 on food every week and you budget $25, you are setting yourself for failure and you will get frustrated or rebel by going out to eat frequently. Same with assuming that you will be able to clear all your debt in a shorter amount of time than is realistic. Budgeting is disciplining yourself to live within the means of your financial situation.
Whats been successful for me
At the beginning I found that taking my original spending pattern, itemizing it, creating a budget that reduced my “life spending” by 20%. I tired that for a month. Then I reworked it and reduced the categories I felt I can reduce further by another 10%. Any savings went in my debt snowball. I also made saving a priority. The ultimate point is that creating a budget is a work in progress, especially if you want to create a realistic and refined one.