Do you think making a monthly budget plan is really important? Or do you think that it is just a waste of time and there are not many advantages?
If you are confused about the issue and want a proper solution you need to consider both the advantages and disadvantages that budgeting involves before deciding your action plans.
Many feel that budgeting is a good habit as it helps you to have complete control over your finances. It is also considered important as it helps them to spend according to a proper plan thus putting a check to their unfair expenses. A good budget also helps in saving a few dollars at the end of the month that can be used to meet emergency needs. If the amount that you can save from your monthly budget is more you can also think about other investment opportunities.
Discussed below are few basic points that can give you a better idea why budgeting is considered a necessity:
- Keeps you away from debts: With the help of budgeting you can keep track of your income sources and can plan your monthly expenses accordingly. You can make a note of your basic expenses and plan a weekly or monthly budget whichever is suitable for your household. You can also keep aside a part of your income after deducting your expenses which can be later used for emergency needs. In that way with a proper budgeting plan you will not make unnecessary expenses that can lead you to pile up debts. Budgeting can thus help you to avoid debts to a great extent.
- Quick fix for your medical emergencies: A proper budget plan helps you to save some money that you can utilize later to meet your emergency needs. Be it paying for your kid’s college fees or the medical expenses of your dear ones it can come real handy. Without a proper budget you may not be able to save even with a good income. You may even be forced to take up loans or payday loans to meet the immediate needs. As such loans come with a high interest rate it can create a financial burden. It is thus advisable to be prepared for such situations beforehand.
- Inculcates a habit of savings: Budgeting prepares you for handling emergency situations in a proper way by inculcating a habit of savings. No matter how little you set aside as your savings each month a good budget plan will always help you save a considerable amount of money. These savings can help you to meet your emergency needs when required. However it is not necessary that you put aside a large sum as savings as that way your monthly expenses will suffer. It is thus advisable that you plan your budget in a way you can afford to save after meeting your expenses.
- Checks unfair expenses: Budgeting is required for maintaining a proper income-expenditure balance. In the absence of a proper budget plan there are chances that you will lose track of your expenses. The end result may lead you to pile up huge debts that you may find difficult to pay back later. However budgeting will draw a line to your expense limit and you will know where to put a stop. It will thus help you to cut short those extra expenses which could have leaded you to debts.
- Helps fulfills your dreams: If there are no debts piled up in your palette and you have saved quite some money by proper budgeting you can think of fulfilling some of your short term dreams. The money you had earlier put aside for emergency needs can be used in making investments that can get you extra money. If the saving amount is considerable you can use it to buy the things you wanted since long, for eg. a new bike, a television set, some gardening equipments or a kitchen appliance. It may be anything and the best part is that you do not have to take a new loan to fulfill such dreams. You can safely do so by using your emergency fund alone. However you need to be patient in saving the required amount by successful budgeting plan first before you think of using it for some other purpose.
Jonny Pean is a financial consultant and writer for EasyFinance.com. He helps people to select the right program to settle their debt issues. He also gives advices on problems related to budgeting, home loans, frugal living and personal loans management.
Short note: Budgeting is a necessity for any household which wants to function comfortably and without the fear of debts. It is not at all a waste of time. In fact when conducted in the right way budgeting can have uncountable advantages to its credit. The article deals with some of those.