7 reasons why making a budget actually does work: Gail Vaz-Oxlade
Financial plans are often misunderstood but they do work.
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People always seem to want to debate the validity of a budget. Second only to insurance, budgets are the most misunderstood financial tool around.
People see them as constraining, like a too-tight pair of shoes that pinch and rub. People see them as rigid; think full-body cast. People see them as impossible, as in, “I’ve made lots of budgets but they never work!”
Budgets do work, and here are seven reasons to have one:
1. A budget is a plan
It’s a reflection of your choices for how you will spend your hard-earned money. Without the plan, you’re driving down the road with a blindfold on and it’s only a matter of time before you run into the ditch.
2. A budget is a gauge
It lets you see if you are living within your means. With easy credit, it is much harder to see that you’re not making ends meet because you can fool yourself into thinking you’ve got it covered. If you have a budget and you faithfully plug your numbers in, the budget will tell you the truth.
3. A budget gives you control
You have dreams of things you’d like to have, places you’d like to go, experiences you’d like to ... well ... experience? With a budget, those dreams and aspirations don’t have to go ignored because you keep getting to the end of the money before you get to the end of the month.
4. A budget anticipates expenses
Without a budget, people think of most of their less regular expenses as “unexpected.” Having forgotten about the car insurance bill that comes once a year, they’re shocked and surprised when the bill arrives. With a budget, not only would you know when to expect the bill, you’d have set aside 1/12 of the total each month so paying it would be no problemo.
5. A budget keeps you focused
It’s a lot harder to spend willy-nilly when you’re on a budget because you’ve accounted for where the money is going down to the last red cent. If you find a category isn’t working because there’s not enough in it, you have to cut from another category to make the budget balance. But every cent is accounted for. No surprises.
6. A budget eliminates squabbling
If you’re mated to one of those people who have no self-control, a budget can be a relationship rescuer since it will reduce arguments about money, as in, “not until we put it in the budget.”
7. A budget reduces stress
Perhaps the biggest benefit reported by people who finally get on a budget is that their stress is way reduced and they find that they sleep better! Following a budget means you eliminate unnecessary worrying over money and debt. You’re confident that everything is figured out, and as long as you follow the budget, you’ve created a plan that will get you to where you want to be.
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