Whether you’re living paycheck-to-paycheck or making millions a year, it is important that you budget your money. No matter how much you make, unexpected expenses or circumstances can cost your financial future and security.
Even though you can’t predict what obstacles life will bring you, you can stay ahead by preparing a personal or family budget.
Budgeting, which involves calculating your expenses and income over a set period of time, can help you take control of your financial future by allowing you to –
- Set a course for your goals. For example, if you want to buy a home, having a budget will allow you to determine how much money you can save toward your goal and when you may reach it.
- Determine where your money is spent. One of the biggest mistakes people make is not knowing how they spend their money. If you track your expenses with your budget each month, you’ll have greater control of your money and easily identify areas of waste or opportunity.
- Build savings. If you know how much you earn and how much you spend, you will be able to determine the amount you can set aside for savings.
- Prepare for emergencies. If you manage to carve out savings in your budget, you will be better equipped to handle any unexpected expenses that may arise.
But perhaps one of the biggest advantages of having a budget is that it can help you sleep better at night. You’ll know how much you have to spend, ensuring you don’t spend more than you have.