Why You Need a Budget
You make enough money so that you can pay your bills when they come and pretty much do what you want with the rest of your income. However, at some point in your life, a hardship might come along and, if you spend everything you make, you won’t have enough in the bank to cover unpredictable expenses. Unfortunately, this is a scenario that affects many people each year. Before you add your name to the list of those now wishing they had prepared themselves ahead of time, it’s important to create a household budget before anything goes wrong.
A budget, in short, is a sheet or two of paper (or a computer spreadsheet) that contains a list of your monthly expenses. While you may think that a list of your bills and monthly obligations won’t help, it will. Here are a few reasons why a budget works. First, it opens your eyes to how much you actually owe out, which, at first glance, may shock you. Second, it identifies the due dates and lets you sort your bills into weeks of the month. Third, it helps you set clear, achievable goals. Basically, it motivates you and lets you take control of your finances.
Without a budget in place, you may miss a payment without realizing it, which will result in your good credit score quickly dropping to a “fair” or even “poor” rating. Without sticking to a budget, you might not save anything for a rainy day or spend money that really isn’t available, and long-term goals disappear. You may even fall behind and then have trouble getting a loan from a traditional bank. If this happens, there are places such as westernshamrock.com where you can acquire a small installment loan to get you back on track.
The hard truth is that once you establish your budget you may, for the first time, realize that you are in over your head. Debt is something that creeps up slowly. You take out a mortgage, a personal loan, and open a few credit cards. Then you open a few more accounts and now you have debt beyond your belief. Reversing the effects of debt will take some time; however, it is something that you can achieve. If you own a home and have equity, you can refinance it to give you a lump sum of money to pay down your debt. However, if you don’t own a home, the process of paying down your debt will take a bit longer. In this case, you’ll need to buckle down and reel in your spending so that you can use the extra money to pay down credit cards with high interest rates and high balances.
Living paycheck to paycheck can take a toll on your body and create health problems. Living with stress and anxiety on a daily basis can affect your mental health and break down your immune system. Creating a budget and sticking to it will allow you to relax and enjoy your life. It will allow you to plan ahead for things like a new car, a well-deserved vacation and college tuition for your children.
A budget is more than just a piece of paper with numbers on it. It’s a representation of your life and creating one will afford you a better quality of life.