Why Budget

When you answer the question, why budget, you establish the basis for your financial life. This is your starting point for control of your finances. It is here that you decide what your goals are and how effectively and easily you can obtain them.

Take as an example your physical body. Think about the fact that your physical body has certain basic requirements. You must breathe. You must eat. You must drink. You must sleep. How well you do these things will have a major impact on your physical being. You make decisions every day that affect your body. You decide not to smoke, and you are able to breathe easier. You decide to eat more fruits and vegetables than junk food, and your body is stronger. You decide to drink more water than soft drinks, and you aid your body processes. You decide how much sleep you get and you determine how well your body renews itself. All of these things affect your physical being. You have a lot of control over your physical body. The decisions that you make give you that control.

In the same manner, your financial life has certain basic requirements also. They are income and expenses. Your life goals will determine how much income you require, and how you allocate that income to meet your expenses.

How much income you acquire and how you acquire it is under your control. You decide whether you work for someone else, are in business for yourself, or don't intend to work at all. You might even decide that the best and easiest way to acquire money is by stealing. I hope that isn't true. You decide if you will work for minimum wage or less, or seek a much higher paying job. All of these decisions will affect your income and your financial life. Income is the major controlling factor of your financial life. Everything else evolves from this. It is here that you free yourself or limit yourself. It is here that your life goals will help you determine your income.

Once your income has been determined, you will allocate expenses. Your life goals will determine where the money goes. You can decide whether you want to be debt-free or not. You can decide whether or not you want savings and how much. You decide how much to put back for retirement, and when you want to retire. You decide whether you will drive a new car every year, or make do with something less. You decide whether you will rent or own a home. You decide how big that house will be. You decide whether you will wear designer clothes or off the rack clothes. You decide how many pair of new shoes you have and whether or not you have a purse to match every pair. You decide whether or not, you will give money to your church or charity, and how much you will give.

Your decisions about income and expenses require a plan, as they relate to your financial life and ultimately to your life goals. This plan is known as a budget. We all make such plans. Not all of us make the effort to develop a careful plan. How well you do the job of developing this plan will have a major effect on your financial life and ultimately your life goals.

Hopefully this answers the question of why budget. We all do these things to a more or lesser extent. We all budget. Those who formalize a budget are generally more successful in achieving their goals.

I hope you achieve your life goals. I really think a formal budget will help you.