by Michelle Wilkinson

Created on: November 05, 2009   Last Updated: September 26, 2010

Budgeting your money enables you to stay on top of your expenses and ensure that the money you have going out doesn't exceed the money you have coming in.

Clearly, in recent years too many people have fallen into the trap of relying on credit to help them pay bills that had to be paid, but also to help them pay for luxury items that they probably would have been better off saving up for. It all has to be paid back in the end, though, and the recent economic woes demonstrate that you can't simply keep borrowing money, and indeed it is much harder to obtain credit now since bankers have been given a slap on the wrists for their irresponsible lending.

Budgeting your money puts you in control of your finances, as you are more informed about the state they are in. You are therefore in a better position to avoid debt since you will know in advance that you are in for a period of belt-tightening, especially if you are at risk of losing your job or have already been made redundant. You may not be able to alter the income you have coming in, but you can certainly work on reducing your expenditures so that, hopefully, you will have some left over at the end of the month that can be put aside for a rainy day.

Sometimes it isn't that difficult to make savings, as you can shop more wisely at the supermarket, avoid making impulse purchases and look for the best deals online, but you cannot always foresee when an unexpected expense is going to crop up. If your washing machine or refrigerator suddenly breaks down, or someone becomes sick or develops toothache you may incur unavoidable costs, and so it helps if you have a little bit of money saved so that you don't have to rely on credit cards or else wait till you have the money at hand to deal with the problem.

Deciding to formulate a budget is a good idea, as sometimes you don't actually realise how much money you spend until you see it written down in front of you, in black and white. It is easy to overlook the amount of money you waste on unnecessary luxury items, but writing it down at least gives you the opportunity to see where you can make savings and work towards improving your finances, so that you can save money for your future.

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