The Importance of Drawing up a Budget – and Sticking to It

Like many of us, you may be a person who spends time worrying about paying the monthly
bills. If you lose sleep over your financial worries, it can be said that you are allowing money
to control you. However, you can take steps to control your money – and sleep better at
night.

What is a budget?

One of the best ways to create financial stability is to create a budget – and stick to it. A
budget can help you to realise your goals, keep track of your spending, and ensure that you
spend within your means.
A budget is, simply, a list of the income you receive, and the money that you spend. It
makes it easier for you to pay your bills on time, add to your emergency finding and reach
your saving goals.

First steps

In order to create your budget, you need all your financial information. In other words, your
bank statements, bills, invoices and receipts. Work out how much income you receive in a
month.
The next step would be to list all the payments you make in a month. This includes
everything you spend money on (including the Seattle coffee you stop for on your way to
work).
If your total income is higher than the amount you are spending, you are off to a good start.
This means that you can take the money that is left over and put towards your savings. You
could also make additional payments on your current debt to help lower the amount and
interest owing.

Why a budget is important

  • It helps you keep track of what is coming in and what is going out.
  • It helps you refrain from spending what you don’t have. If it is not listed in your
    budget, you are less likely to spend it
  • A budget helps you plan for emergencies. In today’s uncertain world, job security is not what it used to be. Planning for emergencies can be done by sticking to your budget.

A budget remains an effective and handy way for you to reach your financial goals. If
planning a budget sounds like hard work, remember that there are a number of handy
online apps that help you. Alternately, speak to a financial advisor for assistance.

Interested in finding out more about sensible budgeting? Speak to a consultant at One Debt
for advice.

Posted in Debt