Friday, March 22, 2013

Why Should I Make a Budget?

Perhaps you think you already know how you spend your money and you don't need to keep track of it by writing it down. Well, I challenge you to perform this simple experiment. Keep track of every single penny you spend for just one month.

You will be shocked at how the little expenses add up. Take the total you spent on just one unnecessary item for the month, multiply it by 12 for months in a year and multiply the result by 5 to represent 5 years.

That is how much you could have saved and drawn interest on in just five years. That, my friend, is the very reason all of us need a budget.

If we can get control of the small expenses that really don’t matter to the overall scheme of our lives, we can enjoy financial success.

The little things really do count. Cutting what you spend on lunch from five dollars a day to three dollars a day on every work day in a five day work week saves $10 a week, $40 a month, $480 a year, $2400 in five years, not counting interest.

Do you see what I mean? It really is the little things. We only provided one simple example. There are a lot of places to cut expenses if you look for them.

Set some specific long term and short term goals. There are no wrong answers here. If it’s important to you, then it’s important period.

If you want to be able to make a down payment on a house, start a college fund for your children, buy a new car, or take a vacation in an exotic destination, then you have a goal and a good reason to get a handle on your financial situation. Making a budget is one of the best ways of doing this.

0 Comments: