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Why is it Essential to Create a Budget?

03/05/2017

Why-to-create-budget

Having a budget is essential to plan your finances and ultimately plan your future. If you do not know where you are spending your money, it becomes hard to take control of your finances. Without financial planning as monthly budgeting, you can put yourself at risk of taking debt through credit cards, loans from bank or financial institutions along with unexpected payments such as medical bills or emergency situations.

For instance, if your take home salary is Rs85,000 a month. This must cover your insurance, healthcare cost, grocery and entertainment along with some money for saving account. However, if you are not taking care of how much you are spending, you may overspend in grocery or entertainment category and find yourself short of finance quickly. Still there are several people, who do not take out time to prepare a budget for themselves.

Creating a Budget is Crucial

Budgeting is not a choice by any means but it is essential for your survival, if you want to succeed in life. Even people with higher earnings cannot thrive well in the long run, if they do not budget their expenses. This is where you hear about millionaires, who go bankrupt. You may wonder how is it possible but it takes to nothing else but budgeting. Budgeting is not such difficult thing – even without any help, you can create a pocket-friendly budget to keep you worry free in life.

Budgeting simply means that you need to spend less than you earn and avoid the stress and pressure associated with over spending and not being able to make ends meet. When you know about your budget, you know what your living expenses are and what expenses you can do without and how much you can save. You will be prepared for emergencies in advance and know how to prioritize upcoming expenses. Budgeting helps you plan for life.

And without budgeting, you can easily get into trouble despite having the best of intentions.

It' s simple to start

Basically, you start with a desired budget for your expenses for each of your primary categories. You can link your bank accounts to the software (if you want to use any) so it automatically pulls your information and starts organizing finance for you. Before long, you will get to know where you are spending your money.

Knowing what you are spending is the key to budgeting. Moreover, budgeting needs not to be fixed – you can and must adjust this to your lifestyle.