Did you know that only 32% of Americans have a budget? While that is great for the 32%, what about the 68% that don’t have one? Are they just flailing without any financial direction, or are they just that good with their money?
What is Budgeting?
Budgeting is the process of combining your income and expenses so that you know how much you can spend on things like groceries, gas, and your mortgage each month. Creating a budget does not mean that your problems will be solved, it simply means that you can find out how much money is coming in, and where it is being spent. A budget will help you determine if you are spending more money than you earn, or whether you have a surplus.
Budgeting is hard because it is not a simple case of 2+ 2 = 4. Instead, it is more like 2+2 = 0. Budgeting is a process that brings math and emotions together. It takes into account your income (hopefully!) and the fact that you want things. A good budget should also take into account the guilt you feel when you buy something you shouldn’t, or can’t afford.
An effective budget should put you in control, instead of letting your money control you. When done correctly, it doesn’t feel restrictive. Instead, it allows you the freedom to spend money in predetermined places.
When making a budget, consider the following:
- What are your financial goals? Vacations? A New Car? Retirement? Buying a House?
- Wouldn’t you love to know that you will have the money to pay your bills every month?
- Would it be nice to know exactly how much money you can afford to spend in every category every month instead of guessing?
Read more at Market Intelligence Center