With major holidays almost over and a new year approaching, it’s now ideal to take the time to create a budget. The past year has been particularly difficult for me, including my financial situation. I wasn’t prepared to pay funeral and related expenses plus additional property taxes, daily living expenses, and traffic court costs *gasp*.
Needless to say, I’ve been struggling to try to make ends meet. Let me tell you, this is less fun than it sounds.
Is creating a budget necessary?
I used to scoff at the idea of creating a budget. Being a single woman, I resented the idea of not being able to spend my hard-earned money as I wanted. Then I finished here.
So while a budget may not be necessary, it’s a good idea.
Why is the budget important?
There are countless reasons why a budget is important. I’ll keep it simple and only share three. The first is the fact that A budget keeps you honest… with yourself.
When you spend freely, it is very easy to start living beyond your means. You open shipping accounts and lines of credit and before you know you’re in debt yet, you can’t see a way out.
(Click here for help getting out of debt.)
Having a clearly defined budget allows you to enjoy the pleasure of shopping but prevents you from overdoing it.
The second reason why a budget is so important is preparation. You can never be too prepared, so Prepare for the unexpected. Desire is not enough to prevent the unexpected or unimaginable from happening. If Murphy’s Law (the proverb, not the presentation) teaches us anything it is that if something goes wrong, it will be.
A budget allows you to set aside money for expected and unexpected events such as a major purchase, sudden death, or natural disaster. Choose an amount that you can easily afford and allocate it to each paycheck. Create a separate account, if possible, to reduce the temptation to use this money.
The third importance of the budget is Stimulate It gives you. While planning how much to spend and how much to save, you also look at your expenses from a new perspective. Perhaps you didn’t realize how much you spend on dining out or entertainment. Seeing how you spend your money can inspire you to cut back on unnecessary expenses.
In turn, a budget can help motivate you to increase your profits. Maybe you want to go on vacation or buy a new car. Knowing how much you currently have to spend on something can give you the boost you need to ask for a raise or increase your hourly rates.
How to create a budget
The last thing you want to do when creating a budget is to drop a lot of money to learn how to budget. Fortunately, there are many free budget resources available. The FTC (Federal Trade Commission) has a free interactive worksheet that allows you to quickly and easily create a personal budget.
I’m working on creating a budget in Excel and will keep you updated on my progress there, as well as share some examples of spreadsheet budget planners with you.