I’ll be the first to admit it. I’m one of those people who doesn’t budget. I calculate expenses for each month and how much my checks are and try to budget accordingly. But something inevitably goes wrong, or I spend money where I shouldn’t. Creating a budget is easy. Sticking to it, however, is more difficult. Why is it important though to have a budget and stick to it? Obviously having a budget and sticking to it helps you save money, but it is also important to have a budget because it helps you to see how and where you are spending the majority of your money.
U.S. News gives us five reasons why we need a budget:
- To set and reach financial goals
- To spend according to our priorities
- Build wealth
- Plan for retirement
- Helps you to be more self-disciplined and teaches you sacrifice
The next question to ask ourselves (or the experts) is how do we go about creating a budget then? If budgeting is so important and necessary, where does one start? Payoff.com gives us five simple steps to creating a successful budget:
- Calculate monthly expenses
- Determine monthly income after taxes
- Set savings and debt payoff goals (yes, even debt has to be budgeted)
- Record spending and track your progress
- Be realistic about your budget
Another question to ask is what software is available or is there particular software or apps to help with budgeting? Using Microsoft Excel is a good place to start, but other software is out there. Some of that software includes:
- Pocket Smith
- Calendar Budget
There are also apps for taking your budget on the go. Some of those apps include Mint and Level Money.
Creating a budget and learning to budget doesn’t have to be difficult. Learning to budget is about having self-discipline. When you start to see where your money goes every month, every week, it becomes easier to realize that you don’t necessarily need that second coffee or you realize that not only can you save money, but you have a bit of extra spending money. Learning to budget is about balance and being realistic with your money.