WHY BUDGET?
You may have yawned (or cringed) when you read the title of this article, but please keep reading. This information is important for anyone who has ever worried about money or been in financial distress, which is almost everyone.
We’ve all been told over and over again to budget. But few people actually do. According to a recent study by U.S. Bank, about 60% of Americans don’t budget. This is one time you don’t want to be in the majority.
Financial success after bankruptcy is closely linked to creating and following a budget. Budgeting is an essential step to achieving your financial dreams, regardless of your income level and regardless of whether or how long ago you went through bankruptcy.
Here are 6 reasons why you need a budget:
1. It will keep you out of debt. You won’t spend money you don’t have so you won’t slide into a black hole of credit card debt.
2. It will reveal bad spending habits and give you a chance to correct them. You may find you are wasting money on things that matter little to you while never putting aside enough to devote to things that do.
3. It will allow you to have an emergency fund so that a major repair or temporary job loss doesn’t become a crisis.
4. It will help you work towards your long terms goals, whether they are home ownership, school tuition, foreign travel, or a comfortable retirement.
5. It will promote family harmony by eliminating (or at least reducing) money arguments with your spouse and children. 6. It will free you from constant worry about money so you can get a good night’s sleep.
Getting your finances in shape permanently is a lot like losing weight and keeping it off—planning and self-discipline over the long term are required.
Managing your finances is a three-part process: (1) tally your current spending, (2) make a budget, and (3) stick to your budget. Your goal is to keep your spending far enough below your income so that you have available a material sum each month to apply any remaining debt that was not discharged in your bankruptcy. Once your debt is clear, devote this monthly surplus to building up your savings. It is only by saving money every month that you will obtain financial stability and security.
