There’s an old saying that goes something like, “It isn’t what you make, it’s what you keep that counts.” I’m no doubt paraphrasing, but it makes the point. It’s what you keep that counts. So you want to be sure that you are spending your hard earned money wisely. One of the best tools that you can have to do this is a household budget.
Why You Need A Household Budget
A Household Budget Shows Where Your Money Is Going
A household budget has one job, and that is to track your money. You record when money comes in, and make a note when it goes out. When it goes out, you have a category to which assign that expenditure. This record gives you a quick snapshot of how much money you brought in, and where it all went, category by category.
The good news is that by tracking everything, you can see how you stand for the month. If you have everything covered, you might have some free money. But without the budget, you won’t know for sure.
You can use a spreadsheet to create your budget, or you can do it all on paper. There are even apps that will create and manage a household budget. It doesn’t matter how you make one, just that you use it.
A Budget Will Help Identify Money Wasters
With all of those categories and their spent totals, a budget can help you pinpoint money patterns that can be used to avoid wasting more money. For example, you may notice that you are paying $150 for a cell phone plan. When the newest model comes out, it may cost an additional $35 a month jus tot buy the phone. Now you have to be careful because we know that buying is an emotional act.
With a quick look at the household budget, you can see how it impacts your other expenses. Then you can ask yourself if you want to spend the money now or make do until the next new and improved model arrives.
A Budget Can Help You Save
Saving without a budget can be hard. You may have great intentions to start saving at the first of the month, but by the end of the month, there is nothing left to save. So you resolve to begin next month, and it repeats.
The household budget can allow you to tweak the expense categories to shave off some money for a savings plan. You can create a new entry for the savings, and it will be part of the money flow for the months to come. It might be best to start slow with a small savings amount and increase it as you get comfortable with the process, things are paid off, or income increases.
Optionally, you can even open a savings account to store your savings as you pay it. Having a separate account will make it harder to dip into at the end of the month.
A Budget Makes Sure You’re Not Spending More Than You Make
A household budget will show you instantly how your expenses total compare to your income. It is this simple: if your expenditures total is higher than your income, you a spending more than you make. This scenario is a losing one, and either side of the income/expense equation must be corrected.
You can do this with more income or fewer expenditures, as long as you end up with your income being greater than your total expenses.
A Budget Gives You Peace of Mind
A household budget can quickly illustrate what shape your finances are. With it, it’s easy to see that everything is paid and money is left over. That can give you happy feelings and great peace of mind. You will sleep better with a household budget.
Of course, if the budget shows that you are out of income money this month even without the expenses, then it can take away a calm feeling. This clarity is why a budget is perfect for showing you an honest snapshot of how you stand financially. Besides, wouldn’t you want to know?
It’s easy to see how valuable a household budget can be. It can show you where your money is going, identify money wastes, help you save money, stop you from spending more than you make, and even give you a happy feeling when things are going well. It is a lot of financial capability in a relatively simple process. I hope you can now see that you need a household budget.