And it’s so easy to take.
- Many people avoid budgeting because they think it’s boring or complicated.
- Sticking to a budget could help you increase your savings and achieve other financial goals.
When you think of how much fun you could have over the weekend, sitting down to budget might not come to mind. But the reality is that following a budget is one of the simplest steps you can take to better manage your money and reach your savings goals.
In a recent Primerica report, 31% of consumers said they don’t consistently stick to a budget. And if you’re part of this statistic, it’s definitely time to change your ways.
What can budgeting do for you?
When you don’t follow a budget, it’s hard to know where your money is going month after month – especially these days, with rampant inflation and everything costing more. But if you don’t set a budget, your finances could suffer. You could find yourself in costly credit card debt due to spending more than you can afford without realizing it. And you might struggle to add to your savings account without better control over your bills.
That’s why it’s worth making the effort to budget. But to be clear, we’re not talking about spending hours and hours each week tracking your expenses.
Building a budget may not take you more than an hour or so. And from there, it’s a simple matter of checking in for a few minutes at the end of each month to see how you’re doing and make adjustments to your budget if necessary.
How to set a budget for the first time
If you’re new to budgeting, the thought of creating one can be daunting. But that shouldn’t be the case. All you really need to do to budget is make a list of your various expenses and look through recent bank and credit card statements to see how much each typically costs you.
Once you’ve mapped this information, you can compare your total costs to your take home pay. If the numbers don’t add up, i.e. you’re spending more than you take home, or you’re spending your entire salary so that you don’t have the opportunity to increase your savings, then you will know you need to reduce certain expenses, partially or entirely.
When it comes to budgeting tools, you have options. You can write your budget on paper, keep a spreadsheet, or use a budgeting app. In fact, the advantage of using an app is that you can connect to your bank and credit card accounts so that when you spend money daily, your purchases are automatically assigned to different expense categories.
Make the budget a priority
Let’s be realistic. Budgeting might not be the most fun thing to do. But it is certainly an important activity. If you haven’t yet tracked a budget, make one a priority. It’s an especially essential tool to have at a time when the cost of living is skyrocketing and there doesn’t seem to be much relief in sight.
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