Hey! Can I borrow some money? Will pay you back this weekend as my salary is due.
You don’t want to say this to someone or you also want to help your friend who is saying this. Both ways the answer is here. You have not planned your money right. Just like you planned your education one year at a time you have to plan your finances too one step at a time. Budget it!
Saving and asset creation is a journey. It does not happen instantly. In addition if not done the right way it can even backfire you. I thought of telling you why you should budget every expense before paying for it. Well, you might think that budgeting smaller expenses are not necessary as you can afford it. But you never know when these small savings will come handy. After all, Little drops of water make a mighty ocean.
We are also aware that even the biggest businessmen fall into trouble just by not doing their finances right. Here are some reasons why you should budget your expense before you spend money on it
Read: What is your networth?
When you save well in advance for an expense you need not spend as much as it costs. Yes! If you start accumulating early the money itself will compound and earn some interest thus making you save lesser for the same essentials. This can usual is yourly be used in large expenses like a holiday, a car etc. that’s the power of Interest rate factor or simply called compounding
Further, set up a target to budget your expense. You have enough time to rethink on your choice. You can either decide not to incur that expense or to postpone it. replacing that expense with another better option is also an advantage.
When you plan your expense well in advance you have enough control on your finances. You do not tend to spend more than what you have earned. In addition, the fear of ‘money for the future’ does not arise.
There is a sense of discipline in life when you budget your expense. With this practice you will observe yourself being organized not just with money but with many other things in life. Further, you can even plan bigger expenses easily and without fear as you are a pro at organizing.
When you follow a system your family also begins to learn from you which is a great advantage. Thus, it is not just you who is saving for the future it is you entire family doing it together. I have experienced this personally.
You are ready for any kid of economic breakdown. I mean sometimes who are financially broken not because of your ways but because of other related factors, say your boss is unable to pay your salary on time. Thus, if you have prepared well you are ready to face these kind of unexpected events in life.
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Addictions are can prevented. Say, you are a tech freak and spend a lot of gadgets while your wife is not happy with it and believes these are unnecessary expenses. Well, if you had planned buying the gadget well in advance this would not have happened. Read my article on Curb your tech cost with these simple hacks.
You are well informed of various investment avenues. As you prepare yourself for the best you tend to read around and learn more things. For eg, Mutual funds kyu sahi hai?
I am sure you have many reasons to budget your expense before incurring. Do let me know how much it has helped you in the comments section below.
Pearl Sequeira is a Chartered Accountant and a Blogger helping people to live life simple and happy with practical tips. She also runs her own blog www.pearltakes.com
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