You Need a Budget

You Need a Budget!

 

We have all heard it more than once – budget your money! Money advisors and financial experts have been screaming this for years on end. It has gotten to the point where many of us are tired of hearing that “B” word. Guess what though? It is just too bad. This is simply one of those financial lessons that can’t be harped on enough. This is especially true in today’s economy where job losses are something that is nearly at a viral state. Our home values happen to be pretty much in the toilet right now, and our wallets are getting tighter. This means that having and sticking to a budget is more important now than ever before. If you want financial security for yourself and your family, this is the only way to have it. 

 

 

We have all heard it more than once – budget your money! Money advisors and financial experts have been screaming this for years on end.

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Setting and Reaching Financial Goals

Once you get a good understanding of the total scope of your finances, you will be better able to see the path to reaching your financial goals. Start with collecting your credit card, bank, and income statements for the past year. Determine how much money you have going out each month and then break the spending down into categories such as savings, medical expenses, debt payments, insurance, household bills, entertainment, gas, and food. Next, you will need to put in your monthly income. Figure out if you have enough to make ends meet, and if not, where to cut corners. You want to make sure that you can pay all of your bills every month on time so that you don’t have to risk getting bad credit. By knowing what money comes in and goes out each month, you will be able to set and see how to reach your financial goals. 

Peace of Mind

Another one of the reasons to be on a budget has to do with stress and your peace of mind. If you don’t have a budget, you might not have any idea of whether or not you will be able to afford that new car, a smart TV, or any other type of major purchase. If your finances are more of a mystery to you, the fact that you desire an item might be enough to justify the cost… whether or not you can actually afford it. 

Emergency Preparation

Another reason you need to be on a budget is the fact that life tends to always be filled with surprises… and they are not always good ones. You might go to work tomorrow only to be laid off. A family member might come down with a protracted illness or be injured. There might be a death in the family, or you may face divorce.  All of these things and more can lead you to face financial turmoil. The thing about emergencies of this nature is that they nearly always seem to happen at the very worst time possible. For this reason, you need to have an emergency fund. 

Retirement

Do you really want to be in a position where you will have to get up and go to work every day for the rest of your life? Of course not. That is why planning for retirement is so vital to anyone’s future. Many Americans though, don’t have any retirement savings. Many of us who do have a retirement savings plan are not contributing enough to it. 

That being said, did you know that even putting aside less than $100 each month can make your retirement fund grow by tens of thousands of dollars if you do it for a number of years? The exact amount will depend on things like how long it will be before you retire and how your investments will perform. The reason this money has such growth is because retirement funds tend to get special treatment tax-wise. That, and the gains have years to grow. The best thing for you to do if you want to stick to your budget while having more to put towards retirement is to aggressively pay of each of your debts, because interest payments alone can add up quickly. Once you pay off a debt, put the money you were spending to pay it off towards your retirement fund and watch how fast it can add up.   

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