Updated: May 4, 2020
Many people think of budgeting as something to do only when they’re short on cash. College students might budget to figure out how to make do with their high expenses and limited incomes. Or young couples trying to figure out how to afford a wedding, may need to minimize their expenses and prepare to budget and outline. Even newlyweds wondering how to fit the expenses of buying a house into their budgets with having a limited cash flow coming in. All of these are examples of people who are mostly likely to need a proper budget. Budgeting is an integral part of financial planning. When done correctly and consistently, budgeting can be a major financial tool in planning for the future.
A continuous budget can help businesses keep their expenses up to date as the year progresses. In a traditional budgeting system, an annual budget is prepared and can be updated when experiencing constant changes in circumstances. The budget cycle is tied to the purpose of your finances and helps build a better understanding of where your money is being used. Without a clear budget, you risk not fully knowing where your money is going.
Once you’ve applied budgeting to your lifestyle, you will see how easy it is to plan your future. Whether you’re planning for a family vacation or putting away money for your children’s colleges fund, maintaining a budget can help with seeing a clear picture of your finances. With a budget in place, you are simply telling your money where to go or stay put.
Make your budget work for you. Update it often, keep all receipts, maintain a list of all expenses and keep adding to your savings account. You are on your way to financial freedom. Start a budget today!