Have you been asking yourself “Do I need a budget or not?”
Budgeting is an intimidating thought when you’re not used to having control of your money.
We have all been hearing it if years. Mom always said you need a budget and to save our money.
I wish I would have listened sooner. Budgeting is one of those financial lessons that need to be drilled into us over and over.
Especially in the current turbulent economy, budgeting is more important than ever.
If you and your family want financial security, following a budget is the only answer.
Do I Need A Budget?
9 Clear Signs You Need A Budget Now
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1. You get paid regularly, but you aren’t sure where your money is going.
You need to set aside some time as soon as possible and create a new budget before the month begins.
If you have a spouse, get them involved too.
Write down all your household income and all your expenses for that month.
Be sure to include every single thing, even the minor stuff. Pull your bank statements and include every single expense, even the morning coffee from the drive-through.
You need a budget that takes your money down to zero. Every dollar will have a direction so there will be no question where your money is going.
2. You spend money that you don’t have.
Ahh, the amazing credit card! Giving us the ability to spend money that we don’t actually have since the beginning of credit card time.
According to Experian’s annual study the average American has over $7,000 of credit card debt.
The Federal Reserve reports that US credit card debt is at the highest level ever, surpassing $1 trillion.
People who overuse and abuse their credit cards don’t realize that they are overspending until they are drowning in credit card debt.
But, if you create and stick to a budget, you’ll never find yourself in this precarious position. You’ll know exactly how much money you earn, how much you can afford to spend each month and how much you need to save
3. You’d like to spend less on groceries, without clipping coupons.
Start by pulling your bank statements over the last few months and find out what you have been spending a month on groceries.
From that point, you can decide how much you would like to reduce that amount.
If you have spent $800 on groceries for the last few months, try and set your budget at $650 for the groceries that month.
Start tracking your purchases, shop the sales, stick to a meal plan and even try switching grocery stores.
With planning isn’t that hard to cut your food bill.
4. You want more money for fun stuff like vacations and holidays.
When you start saving money on groceries you will have more money for the fun stuff like vacations or family trips.
You can take that $150 you saved on groceries and put it into the vacation section of your budget.
5. If you take a huge income hit.
Life is filled with unexpected surprises, some better than others. When you get laid off, become sick or injured, or have a death in the family it can lead to some serious financial chaos.
Of course, it seems like these emergencies always arise at the worst possible time.
This is exactly why everyone needs an emergency fund.
6. You have bad spending habits.
Building a budget forces you to take a close look at your spending habits. You may notice that you’re spending money on things you don’t need.
Do you really watch all 500 channels on expensive satellite television?
Do you really need to buy coffee from the coffee shop every day?
Budgeting allows you to rethink your spending habits and gives you a chance to re-focus your financial goals.
7. You’re tired of stressing about emergencies and unexpected expenses.
Your budget needs to include money for emergencies and unexpected expenses.
You need to have cash available to cover an emergency hospital stay or a shattered windshield. The last thing you want to do is rely on a credit card for an emergency fund.
Your emergency fund should eventually consist of at least three to six months’ worth of living expenses.
For most of this, three to six months of a fund is quite a bit. So don’t try and put all your paycheck into your emergency fund right away.
Write it into your budget and set realistic goals. You can start by just putting $25 aside each week and your emergency fund will build slowly but surely.
8. You’d like to save more for retirement, but you can’t find the extra money to make it happen.
Saving for your future is a critical part of spending your money wisely.
It is important to build your investment contributions directly into your budget. Although you may have to sacrifice a little bit now you need to be taking advantage of the power of time to grow your money.
With your money compounding year after year all the sacrifices will be worth it down the road.
If you set aside a portion of your earnings each month to contribute to your IRA, 401(k) or other retirement funds, you’ll eventually build a nice nest egg.
Acorns is a great app that I use. Acorns can help you start investing with just your extra change. It is all automatically so you set it and forget it, and watch your retirement grow.
9. You don’t know what your financial goals even are.
Having a budget will help you figure out your long-term goals. Having a budget makes you look to the future and map out your goals.
Save money, keep track of your progress and make your financial dreams come true.
If you’re tossing your money at every shiny object that catches your eye, you will never be able to save for retirement or a down payment on your dream home.
There is no doubt about it, you need a budget.
More importantly, you need a budget that you can stick to.
Remember, budgeting isn’t automatic.
It’s a learned skill that you have practice every month.
But the great news is that the more you do it, the better you’ll get at it!
If you are just starting your budgeting journey check out these amazing posts:
Do I need a budget?