Why Keeping a Budget is Important

People nowadays live their lives by four letters – YOLO. If you’re unfamiliar, YOLO means You Only Live Once. While it is true that we only live once and we have to make the most of our time here on earth, YOLO is usually a phrase people use to justify their unruly behavior, because, well, they only live once. It is quite common that YOLO is associated with something outrageous, and people use it even to justify their unnecessary and unwise spending.  That 500 dollar shoe, because YOLO. That 1000 dollar phone, because YOLO. This YOLO mentality has affected our spending in more ways than one, and most of the times, it’s not good.

 

Why Keeping a Budget is Important

 

In this day and age when we think that we should have everything we want and more, we can YOLO and still be financially smart. One simple step to that is to keep a budget. Why this is important, you may ask? Here’s why:

 

1. Failing to plan is planning to fail.

 

I don’t want to be poetic and all, but this Alan Lakein quote hits home hard. Budgeting is creating a plan for your money. If you don’t have a plan for your money, then you’ll spend it practically everywhere. Spending your money everywhere leaves you with no spare, so what you do is wait until the next paycheck comes. Forecasting where you want your money to go will give you more room to allocate expenses wisely.

 

2. It makes you conscious of your spending.

 

When you budget, it doesn’t mean that you can’t spend on the fun stuff. Budgeting means giving your money a job. Allocating 200 dollars for gas, and another 35 dollars for a new dress is wiser than buying a new dress and then getting short of gas by the end of the month. It’s also important to assign ALL your money to something. Do not leave any single cent in your bank account that’s not going anywhere. Allocate it to savings, or emergency fund, or travel, it doesn’t matter as long as you give your money a job to do. It doesn’t mean that you have to spend everything you have. When you have spare money, go allocate those to your emergency fund or something.

 

3. It will give you time to save for major expenses like buying a car or house.

 

Budgeting allows you to forecast how much money you will be able to save for a future expense like buying a house, a car, or that designer bag that you like. This will help you be wiser in your spending while keeping your eye on the prize.

 

4. It makes your more financially stable.

 

Remember those first few months (or years) of working when you literally live paycheck by paycheck? Being in that situation is not a pretty experience. When you budget, you will know which expenses need to be cut down so you can have enough to live by before the next pay check comes. Do you spend too much on food? Or do you already have too many new dresses? With your budget, you will realize how much you are spending on something. This can make you reorganize your priorities and maybe start on some worthy investments like health insurance or something. When you keep a budget, all these will be laid out to you.

 

People tend to oversee the importance of budgeting. Being money smart is an essential skill that is relevant in this day and age especially in the advent of online shopping, social media, and the likes. There are a lot of ways to keep your budgeting easy and fun, and there are even softwares and mobile applications that you can use to help you achieve your financial goals. Check out You Need A Budget to start your financial journey.

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