Confused, no plan?
Recently a poll was conducted by the National Foundation for Credit Counseling (NFCC) revealing 57 percent of respondents misunderstand the purpose of a budget. They viewed the personal budget as a restriction on their spending, however; just the opposite is true.
A properly managed budget provides the structure through which a person can be in charge of their spending, directing the dollars to their best use. All spending would be a reflection of predetermined priorities. Without a plan, priorities seem to get pushed aside in favor of instant gratification.
Reluctance to constructing a budget often suggests people may be fearful to face the financial facts. They instead choose to pursue the most pressing need or want of the moment to make the decision for them. The NFCC reminds consumers that a spending, or a budget, plan includes the following benefits:
- Creates a thoughtful awareness of spending
- Relieves financial stress
- Increases financial security
- Helps structure a plan for the future
- Allows planning for large purchases
- Assists in meeting financial goals
- Frees up money to designate for savings
- Uncovers money available to invest
- Allows preparation for emergencies
- Avoids late payments through scheduling timely payments
- Finds hidden money for debt repayment
- Potentially raises the credit score
A budget, instead of being restrictive, often creates more money due to smart spending choices. If financial independence is the goal, a budget is the tool that starts the process.
Rich or poor, all income earners benefit from a spending plan, yet when times are tough, budgeting becomes more critical. When penny’s, it’s important to count every penny.