What is budgeting? Discover this mystery as you embark on preparing a household budget plan of your own and you will avoid ending up with more month than money.
If you're thinking that you will have to stop buying all those goodies that make your life pleasant, you will only be partially right. You want a budget that won't make you feel deprived. Those that do are doomed to fail because you are human, after all. You have pleasures that need to be nurtured.
Perhaps shopping sprees satisfy your need to escape the confines of living to fit your means, or just to relieve stress. Maybe you have a hobby that must be fed. There are many things people spend money on that go beyond basic needs, but they cannot be excluded. That's where effective budgeting comes in.
Budgeting as a Guide
What is budgeting? It is simply a guide to how you spend your money on a daily, weekly or monthly basis. Without one, you likely will spend money haphazardly on whatever strikes your fancy. At the end of the month, you will have nothing left to put in the bank or worse, not have money to pay all your bills on time.
Budgeting helps you to avoid paying those high interest rates every month. People waste millions of dollars every year on interest alone because they do not have a budget. They rely on credit or they just don't pay their bills on time.
Either way, you pay more both in interest and in your credit score which can severely affect your ability to get credit when you really need it. If you decide to buy a house or a cottage, your loan will be denied if you have a bad credit rating. If you want to take an elaborate vacation, you won't be able to get the funds to pay for it unless you have the savings to cover.
This brings us back to budgeting. Not only will you save on interest every month, you will not need to borrow money when you decide to plan that long-awaited exotic vacation. You will pay far less in interest rates if you can put down a substantial sum on your house purchase.
As you can see, it's important to look and plan ahead. And that brings us to another stage in the budgeting process.
Preparing a household budget plan is THE way to ensure you live below your means, become and remain debt free, and live a financially free life.
Wow - such incredible freedom by learning how to make a budget and sticking to it. What is budgeting? It is a spending plan telling your money what to do in each of the typical categories such as food, housing, auto, entertainment, etc. For each month, you will plan ahead how much to set aside from your paycheck for these categories.
So sit back, take a deep breath and relax. You CAN learn how to make a budget. Here is your pop quiz: What is a budgeting? Yes! A spending plan. See, you ARE ready!
Now that we have answered the "What is Budgeting?" question, it is time to find out if you are prepared for personal budget planning.
Here are the rest of the budget planning articles.