Budget so that you stay on track
HARD TO DIG WAY OUT OF DEBT
IF YOU don’t tell your money where to go, it will find a place to be spent. Come on now, budget and make your dreams come true this year.
Budgeting is not a popular subject for some people. Perhaps we have not explored what usually happens when you don’t have one. Here’s what happens:
When you don’t have a budget, getting into debt is a piece of cake. While there may be various reasons why people spend so much on their credit cards like job loss or medical bills, we can also blame it on the fact that most people spend freely and willingly without a plan. And most of the time, that kind of spending leads people straight into debt.
When you don’t have a budget, it’s far too easy to spend more than is reasonable – or even more than you bring home each month. And once the debt spiral takes hold and you start paying interest, it becomes even harder to dig your way out.
Without a budget, surprise expenses can throw you off track.
When you create a written budget every month and track your expenses diligently, you will have no surprise bills or unauthorised debit orders going through your account without your knowledge. A budget gives order in your life because you will know exactly what is supposed to come out of your account. But when you’re flying blind without a budget on the other hand, it might be difficult to remember which bills are due and when.
Without a budget, you have no idea how much you could be saving. While this isn’t an obvious point, it’s just as important. When you don’t use a budget or track your spending, you have no idea how much money you might be able to save if you would just try.
You’re not only missing out on potential savings – there’s an opportunity cost here as well. If you could save an extra R100, R200 or even R500 per month, for example, you might be able to invest and be financially better off, or become debt-free for good, or save the cash to launch a life-changing business idea.
Often, it’s the expenses we don’t think about that stand between you and your goals. When you don’t plan your spending, you waste money.
When you don’t have a budget, it’s far too easy to spend much more than you dreamt.
Here’s a good example: I recently helped a young lady to track her expenses. To her horror, she noted that she is spending R3 500 of her grocery money on meat for two people! It was a tough pill for her to swallow but fortunately she so badly wanted to change her financial life she stopped doing that and has extra cash now. A written monthly budget is forcing her to confront her spending and even try to find other areas where she can cut expenses.
When you don’t have a spending plan, it’s much more difficult to reach your goals.
Not saving enough to reach your goals? Whether you want a retirement nest egg, a fully stocked emergency fund, or some fun money to spend however you want, a monthly budget is the best way to make that happen. The bottom line is, budgeting brings all of these issues to the table, and forces you to spend according to your values.
Finally, if budgeting makes you feel grumpy; try thinking about it in a brand new way. Instead of seeing budgeting as a set of self-imposed restrictions, think of all you could gain instead. We all have financial goals we want to achieve. Maybe you want to retire early, dream of paying for your child’s college tuition, or simply want to stop stressing over money every month.
Either way, budgeting is the best way to make your dreams come true. And no matter how much you hate the idea, no amount of shrugs or eye rolls can change that fact.