Why you Need a Sound Budget (Plus tips to Create one)

*This post was sponsored by debtconsolidation.com

No matter what age you are, having a sound budget is vital to start preparing for your future. From short-term goals like saving for holidays to longer-term stuff like buying a house, budgeting is the foundation of pretty much everything financial that will happen in your life.

Why you need a sound budget

Living paycheck to paycheck is not going to help you attain certain financial goals, and it can also be a nightmare if you have an unexpected expense. That’s why there are a number of reasons to have a sound budget. 

It stops you from spending money you don’t have

It’s funny how quickly money can actually go. If you just spent the few days after payday buying everything to your heart’s desire, your money would soon run out. That’s why creating a monthly budget is so important. 

It can help you track bad spending habits

Looking at what you spend over the course of an entire week, month or year is a great way to track unhealthy spending habits. Things like that daily coffee you get on the way to work can soon add up over the course of a month. Budgeting helps you to see how feasible continuing these habits is going to be if you want to reach some sort of saving or investing goal.

It helps prepare for emergencies

When the pandemic hit, a lot of people were left without jobs, or if they at least kept them, significantly reduced hours. We really have no clue when a huge worldwide emergency like this, or something smaller like needing a car part can hit. Budgeting and ensuring you put some money by each month can help you in times of need.

It helps you focus on a goal

If you have a particular savings goal, seeing a certain amount of money going into it every month can be just as fun as spending the money. If you budget properly you should be able to accurately forecast when you are going to reach your savings goal, which is really exciting. 

How to achieve a sound budget

Deciding you need to get on top of your finances and start to budget is a great step, but if you want that holiday or house then you will need to put some methods in place to help you stick to it to attain your ultimate goal. There are a few good ways that you can ensure you stick to a budget.

Take into account that you might need different budgets for different months

If you are going to budget realistically, then you will need to account for the different months and the different challenges that come with them. For example, heating is going to cost you more in the winter months, so you might need to factor that in. Also, if you have kids, there will be certain times of the year when you need school supplies etc. It’s not all negative though. There may be occasions where you can add, rather than subtract, like if you walk or cycle to work in the nicer weather. 

Trim luxuries when you need to 

If things are getting tight, but you are still keen to make sure you budget, you can cut out certain luxuries to ensure you meet the budget on tighter months. For example, some months you might choose to do the food shop somewhere that little bit cheaper.

Create a buffer

Unless you want to keep dipping into your savings all of the time, it is worth creating a buffer in your budget for unexpected expenses. This way you can just get into the mindset of not touching your savings at all. 

You can find more budgeting tips here

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