Let’s be honest, budgeting isn’t fun unless you’re a nut over spreadsheets or just have tons of money and have nothing else to do but watch it grow. Otherwise it can be rather painful. Even with the mirage of Personal Finance books on the market, none seem to get it exactly right on why this budgeting thing is so important or an easy way to get it done. And besides, if the leaders of our country and most corporations don’t think it’s important, or can’t seem to get it right, why should we even try?
Because, it’s an important part of Personal Finance! The key word being “personal.” It’s all about you and your life, goals and aspirations. For a variety of reasons this budgeting thing can help you or haunt you for a very long time. And only you can bail you out. Here are 5 reasons why you need to do it now…
Budgeting Money Reason #1: Your Personal Blueprint for Success
Imagine building a home without a blueprint! Try going to a builder and describing your ideal home and ask him to quote it or build it. It can’t be done! The home is only as good as the foundation. And the foundation can’t be built without a plan!
As in the home building process, your budget will be your blueprint to define what your finances look like, now and in the future. If you want that new car or vacation, you must have a plan to get there. If you want to retire at a certain age, you must have a plan to get there. Do you have kids that want to go to college? It won’t happen without a plan. Yep, a financial plan is your blueprint to meet your goals.
Budgeting Money Reason #2: Better Goal Setting and Decision Making
Have you ever wondered why you haven’t been able to achieve a financial goal? Do you run short of money each month just paying the standard bills? If yes, that puts you in about the 90 percentile of us that just simply don’t have a clue on setting realistic goals.
By knowing how much you spend on each of your required expense categories, such as housing, food, and transportation, you can make intelligent decisions about your spending plans for the more fun things in life such as vacations and entertainment. Analyzing your personal finance “numbers” gives you the information you need to decide whether you are spending too much in one category and choking yourself off from your real goals of enjoying life.
With a written plan (budget) you can start to make proactive decisions against realistic goals!
Budgeting Money Reason #3: Create a Proactive Spending Plan
If you like to spend money and meet your financial goals, budgeting is for you! Most people believe the myth that budgeting will curtail their spending. But it doesn’t have to. Budgeting is merely telling your money where to go – to go pay a bill, go save for a goal, or go buy me that nice dinner at a restaurant. You proactively set up a spending plan and predetermine where your money goes each month. That’s proactive spending! By writing your spending plan on paper each month before you start the monthly spending process, you are ensured that you will have money each month to do the things you need to do.
Budgeting Money Reason #4: Prevent a Problem Before it Becomes a Serious Problem
How many times has an emergency caught you off guard? Without a plan, if a furnace breaks down or car needs a major repair, you end up fixing it with VISA or Mastercard. We all know these types of problems will occur and probably will, especially if you don’t plan for it. Having an emergency fund will help eliminate the emotional and financial stress of paying for these expected problems.
Knowing that these emergency issues come up just helps us plan better. Accounting for these types of expenses is easy to do when you budget for them in advance. Then when they occur, you simply pay the bill because you have budgeted for emergencies.
Life emergencies can occur also such as illness, layoff, or salary reduction. Too high of a percentage of the population are just one paycheck away from a severe life emergency AND and financial emergency. Having a plan will better prepare you for the financial part of that and lessen the blow.
Budgeting Money Reason #5: Your Financial Planner will Love You
When you have a well-documented plan with goals, assets, debt, income, and monthly budget, you can walk into any Financial Planner’s office with dignity and offer a clear understanding of your current financial position. With that understanding a Financial Planner can then assist you with strategies to meet your longer-term financial goals and objectives.
Without such a document or plan, it is very unlikely that they can help you other than just generic advice. By you taking control of what you’re good at – your current position – they can much better assist you with the right financial product mix.
Budgeting Money Reason #6: Your Partner will Love You
Financial security is important in any union. Partners need to be on the same page and are generally grateful to see a written plan with goals and objectives. Work out goals together and rejuvenate your relationship! Experience the joy of providing security for your loved ones!
Your Next Step
The beginning of the year is a great time to take inventory of your current financial position. Check out the Personal Finance books on the market. If you want an inexpensive and cookbook-style approach, try our Personal Finance Book at budgetingmoneytips.com. If you need one-on-one coaching, we can help you with that too with our Budgeting Coaching Program. It will be well worth the investment of your time.
Michael Kastler is an author and personal budgeting coach who has created a variety of budgeting tools including his personal finance book- “Get a GRASP on Your Budget and Your Cash”. His budgeting money tips blog helps individuals become debt free and can be found at http://www.budgetingmoneytips.com