What Is A Budget and Do You Need One?

We are getting back to the very basics here on Be Secure Financially. So, the basics to budgeting and taking control of your finances is with a knowing what a budget is and taking the steps to create one.

The definition of a budget is the following:

Budget according to Dictionary.com

1. an estimate, often itemized, of expected income and expense for a given period in the future.

2. a plan of operations based on such an estimate.

3. an itemized allotment of funds, time, etc., for a given period.

4. the total sum of money set aside or needed for a purpose: a home buying budget.

Many people, and you may be one of them, are often afraid of the word budget. First, it makes you take a hard look at your income (salary, savings, etc.) and your expenses (rent, mortgage, car payments, groceries).

So, often you don't create a budget because you will have to face your money reality. How much you have and where it is going. However, it doesn't have to be scary.

Creating a budget can help you stay organized and know exactly where your money is, and then help you to save or create more money.

The second objection to creating a budget is the "no fun" aspect. You may feel that if you have a budget, you won't be able to have "any fun". Well, that definitely doesn't have to be the case. You just budget for your "fun" things: shopping, dining out, concerts and more.

It is simple: knowing how much money you have coming in and going out can help you to plan for your financial future. It can also help you better manage your current lifestyle. Therefore, allowing the entire personal financial experience to be stress-free and peaceful.

No matter where you are at with your financial journey: just scraping by or living a luxury life, figuring out basic personal finances and money management can allow you to live a better, more enjoyable life.

If you make money, or just have money, you need a budget.

Many people fall into the following categorgies:

Living Paycheck to Paycheck

Spending More Than You Earn (Going Into Debt)

You may save some money here and there, which is a good start, but won't get you to your financial goals, paying off your debt, buying a house, retiring and more. At least not soon.

So how do you create a budget?

It I Simple Here Are 5 Easy Steps To Create a Budget

1. Identify how much money you make

Include your monthly, bi-weekly, or weekly salary or paycheck amount

Go ahead, write it down, we'll wait :)

2. Note your expenses and track your spending

This includes all monthly expenses. Try not to leave anything out.

Include rent or mortgage, car payments, car and other insurances, utilities, cell phone, internet, cable, monthly subscriptions, student loan payments, groceries, dining out, entertainment

3. Set your financial goals and make a plan

What are your goals? Only you know what your goals are, only you can set them, and only you can achieve them.

Goals can be: "I want to save $100 extra every month; I want to take my family to Disneyland this year; I want to buy a house; I want to retire at 55 and be financially secure; I want to be financially free

4. Adjust your habits

This can be the hard part: you may have to make adjustments. Can you afford your current expenses? If not, where can you cut back? Look into different cell phone provider plans, then call them and ask about adjusting your plan to match competitors, or switch to a more affordable option. Look at your expenses and determine the difference between a need (food and shelter) and want (your multiple monthly music subscriptions). Only you can adjust your budget and only you know if you need to dine out every weekend.

5. Keep checking in

View your budget every month and see if you are staying on track. Maybe you cut back on your Starbucks run, but now you can afford to add it back in, because you are saving somewhere else.

You may get a raise, or have a new goal, so you need to adjust your budget; but you can take control of your finances with these simple budget tools

Here are a few good articles on budgeting:

Read More: https://bettermoneyhabits.bankofamerica.com/en/saving-budgeting/creating-a-budget

Read More: http://thefinancegeek.com/everyone-needs-a-budget/

Disclaimer: The content on this site is provided for information and discussion purposes only. It is not intended to be professional financial advice and should not be the sole basis for your investment, financial or tax planning decisions. Under no circumstances does this information represent a recommendation to buy or sell securities, or any other products, or services. All content and information is subject to change at anytime.


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