Guest Author - Deborah M. Dera
When it comes to spending and saving, we all mean well. But thereís a really cool sale at the department store, or you run out of something major in the pantry, or the car breaks down Ė and before you know it, the amount of money you thought you had to get from paycheck to paycheck no longer exists. What you need is a written budget Ė and yes, it needs to be written.
You Wonít Overspend
You canít spend money you donít actually have. If every line item in your budget is filled, and you have very little money left at the end, you know exactly what you have. You know that all of your other dollars are earmarked for more important things. Youíll also know you have no money in your budget to pay off a credit card, so you wonít be as tempted to charge.
You Can Plan
Even if you do have a little leftover, you can make a better plan for how it will be spent. Seeing exactly how much you are spending in each category of your budget will help you to decide if itís necessary, if you could save more, and if you could remove an item. For example, you might cut your ďlunchĒ budget in half, bring food from home, and have more money to put in your savings or to pay off a credit card. Every dollar counts.
A budget will help you prepare for emergencies. My budget has a line for savings, for vacations and whatnot, but it also has a line for emergency savings. That account, per experts, should contain 3 to 6 months of income. Be patient and remember, adding even $5/week to that line helps.
Speaking of savings, if you donít include it in your budget, you wonít do it. Trust me. Having a savings account will help you to reach big goals later on Ė a new car, a house, a retirement fund. Donít neglect your savings. Again, ever dollar counts.
Budgets Help with Accountability
You may think you can keep your budget in your head. You canít. If itís written down, itís a solid document that will suddenly make you accountable for what goes in and out of your accounts. If you arenít writing the numbers down, you can see your overall financial picture, you canít tell how close you are to falling over the spending ledge, and you canít improve yourself.