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Importance of budgeting

Updated on February 13, 2010

 

There are some people who are afraid of planning how to spend money. They fear that a plan will prevent them from using their money as they wish. A budget is a spending plan of using available money to satisfy your goals. It is an estimate of your income for a certain length of time and your plan for using it. It is a plan for expenditures and savings. To be able to do so, you must learn to manage your income. You develop skill as you make your personal budget regularly. Managing a small amount utilizes the same principles as that of bigger incomes. It is not enough to make a well-planned budget; you must also keep records faithfully so you will know where your money goes and whether or not you are achieving desirable goals. It is important to balance spending with savings and to look forward to where money should be spent. Wise handling of money means looking back at and analyzing the nature of your expenditures to guide you in your future plans.

Having a budget will help you control spending and insure maximum satisfaction and returns. Everyone has to learn to earn, to spend, and to save money. When it comes to money matters, you must think several times before you "follow the crowd." Your goals affect your attitudes toward money. The ease with which money can be obtained, likewise, can affect your attitude. For example, money easily obtained will also be readily spent. Money is spent extravagantly by young people who have grown up in families which readily supplies money. Their attitude seems to be that money is not that important. On the other hand, those who must struggle to have money for their basic needs will value money highly. People who think of money in relation to the time and energy they spend to earn it will use their money wisely.

A good budget should include savings. Savings helps you meet emergency situations. For example, if your father were to be hospitalized, this would mean increased medical expenses and possibly a decrease of your allowance. You may also use your savings for emergency wants like buying a concert ticket or new attire for a party.

Learning to manage your money is easy. A budget is simply a plan for using the money you have so that you can get the most value of things you want. Making a plan requires only a little time and thought. Know your needs; prioritize them and decide which of these needs will attain best your own personal goals.

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