by Amela Piric

Created on: May 06, 2009   Last Updated: May 31, 2011

Budgeting helps you to live within your means, control your expenditures, and monitor your income.  Budgeting can help you oversee your expenditures in an organized, continued and predictable fashion.  It can help you prioritize your expenses and dedicate a significant amount of money for a certain purpose in line with your priorities.  Budget can also help you attain financial stability which is a prerequisite for achieving success and lasting happiness in other areas of your life.  If you stick to budgeting, it will eventually help you to achieve financial independence and a peace of mind that comes with it.

Below listed are main reasons why you should design a budget.

1-Budget allows you to exercise more effective oversight over your finances

Budget is a financial tool designed to help you execute your financial plan.  It can help you to plan for and set your priorities, differentiate between your wants and needs, and monitor your income and your expenditures.  Budget will help in keeping your finances on track and will not allow you to overspend your money.  It will allow you to measure your progress and reward yourself for accomplishments along the way.

2-It helps you save your money in a predictable and organized fashion

Rather than spending your money upon the receipt of your paycheck, your budget will help you to manage your money more efficiently by tending to your priorities first and cutting unnecessary expenses. Budget will tell you where your money is going and which items need to undergo reduction in spending. Budget will help you plan for your expenses on time and will save you from urges of impulsive spending. Budget allows you to save for your emergency fund in case you suddenly loose your job or have a medical emergency in your family.

3- It allows you to monitor and track your progress

With the excel sheets on your computer or a diary at home, you can achieve a good and clean record of all your expenditures including dates, items, and prices for each item purchased. Budgeting will help you to keep better track of your expenses, make modifications as you go along if necessary, and improve your spending and saving habits.

4-It helps you avoid credit cards

With budget in place, you will no longer need to rely on credit and credit cards. You will manage to save up cash for the items that you really need and want to purchase. Thus, you will avoid the trouble and anxiety associated with high levels of indebtedness.

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