Here are the 3 major reasons to make a monthly budget. Following a comment from a reader, and his situation as a student, I thought that an article on the reasons for making a budget would undoubtedly be interesting for you.
Basically, how can you make a budget and make this action worthwhile for you?
Know that your budget is neither more nor less than a projection of your income and your expenses for a given period which is usually a month.
You must attempt to forecast your income and expenses in some way to successfully optimize your financial situation.
Whether your budget is weekly or monthly, its importance will be directly related to compliance with it.
What’s the point of making a budget if you don’t take into account what is written in it! You are going to lie to yourself.
The main reasons for making a monthly personal budget
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In the beginning, I personally used the budget to adjust myself in my daily expenses.
It was like a kind of guide actually.
Over time, I have instilled in myself a way of living (and spending) that means that I no longer really need to make a monthly personal budget to know where I am going, financially speaking .
But, know that I still make my budget every month to control my income and my expenses.
In my opinion, there are 3 major reasons for you to set up your monthly personal budget.
I want to give you a list of reasons why budgeting will save you more money over the next few months.
You can imagine that there are a multitude of reasons for making a budget. However, I sincerely think the next 3 are very important:
- Control your expenses;
- Plan your personal finances;
- Realize your financial dreams and goals.
Controlling expenses is the main reason for making a monthly budget
Your budget can and should be your benchmark for spending.
Comparing what you actually spend with what was originally planned is the cornerstone of a company’s budget control.
The same goes for your personal money .
With your budget, you will know where your money is coming from and where it is going. If you don’t know your financial numbers, you’ll be sailing like a rudderless captain.
Plan your personal finances with a monthly personal budget
By planning your finances, you are able to achieve many more goals than the average person.
If you make a budget, you will serve this very laudable objective well.
For example, if you want to go on vacation, you can include in your budget an amount that will go towards this goal.
Same thinking for preparing for your retirement.
Include in your budget periodic payments that you will invest in order to build up a nice retirement fund.
And what about your car!
Is it easier for you to set aside a few dollars a month to plan for a future purchase (cash) of a car or to borrow several thousand dollars all at once and buy this liability on credit?
I understand you that preparing a budget is not so easy.
In fact, what is often difficult with your budget is that it is trial and error. In the sense that it is often trial and error that will define your success.
Your income is probably easier to predict, but your expenses are different. There is no single model that works for all people unfortunately.
The rich are frugal
One really important thing about your budget is that it allows you to spend only within your means.
With our consumer society, it’s easy to spend everything and even more .
The budget will help you stay within your limits by knowing exactly what you can spend on each type of purchase. You are going to be able to spend less than you earn.
It really is the best ingredient to achieve your financial freedom.
How to make your dreams come true on a budget
If you need a specific amount to realize your dream, the budget will be your best tool to get there.
Planning a portion of your income is the action to take.
Thanks to your budget, you will be closer to your goal.
Often, achieving this kind of objective requires a lot of seriousness and financial discipline. Luckily for you, the best guide to getting through these hurdles will be your budget!
