Sometimes we don’t take the time to assess
our finances or create a budget until we absolutely need one. Unfortunately,
budgeting is one of those things we put off, and even dread, until we can’t
avoid it any longer.
You
know it’s time for a budget when:
You
Can’t Pay the Bills
If you are having a hard time making ends
meet, you need a budget. When it seems like things are always tight you
consistently make late payments, or you aren’t able to pay some bills at all,
you need to make a change.
Budgeting can help you determine if your
income is sufficient enough. It can help you find ways to cut back and save
money or help you prioritize so you can pay the bills before you blow your
money on something you don’t really need.
You
are on a Diet, But not By Choice
If your diet has been reduced to cheap
noodles and two meals a day instead of three, you need a budget. But, in all
seriousness, if you find it hard to stock your cupboards a budget can help you
get back on track. A healthy diet is important to your physical and emotional
well being, and this isn’t an area you should skimp on. Try assessing how you
spend your money to see if you can add more to your grocery budget each month.
You
Think About Finances All the Time
Finances shouldn’t control your life. If
you find yourself preoccupied by bills, your income and how you will make ends
meet, it might be time to reevaluate how you do things. It’s not fun, or
healthy, to constantly worry about finances. To alleviate your stress and make
things easier, create a budget that dictates how you will spend your money. If
you find that you aren’t making enough to cover your expenses, find ways to cut
back or increase your income.
Your
Savings Account is Constantly Empty
Saving money can help you prepare for
emergencies and provide you with financial stability that can give you peace of
mind. When you have some money in savings things like car repairs and medical
expenses are less of a worry. In general, it’s good practice to put a portion
of your income into savings. If you aren’t able to do this for extended periods
of time, you need a budget.
People often think of bills and expenses
when they think of a budget, but budgeting and financial planning is just as
important to saving money as it is spending money. Create a budget that makes
room for savings even if it’s just a small amount every month. These deposits
can add up, helping you attain financial stability.
You
Catch Yourself Doing Ridiculous things to Save Money
Are you becoming obsessive about saving
money? If you catch yourself doing ridiculous things to save money, it’s time
for a budget. Saving money is an excellent habit to be in, but going to the
extreme just to get by isn’t healthy, and it’s a sign of financial trouble.
The inability to save money could be a sign
of two different things: first, a lack of income and second, unwise spending.
Analyze your budget and watch your spending to discover which problem you have,
and then make changes to fix it.
You
are Always Behind
Getting behind on bills can be more than
frustrating; it can be dangerous. If you fall too far behind on some things,
you risk harming your credit or losing service. Skipping payments on loans, and
hurting your credit, sets you up for failure. If you try to apply for a home
loan or car loan in the future, you may not qualify for an adequate loan, or
any loan. If your electric or telephone company is warning you that it will
discontinue your service due to nonpayment, you know it’s time to reassess your
finances.
A budget can help you stay on track with
due dates, saving your credit and your services. In fact, you may even be able
to catch up on late payments with a good budget.
You
are Selling Your Belongings
Selling something you don’t use or to earn
a little extra cash is normal, but if you are doing this on a regular basis,
your budget needs some work. The habit of selling things to make ends meet
every month signals a deeper problem with your finances. Look at how you are
spending your money and see if you can cut back anywhere. If you can’t, it may
be time to find another job or another way to increase your income.
A
Pain-Free Way to Create a Budget
If any of these habits sound familiar you
need a budget. If you’re like most people, you cringe at the thought of having
to wade through your finances, stop spending your money they way you have been
and form new habits. But, making a budget doesn’t have to be hard.
Start by making a list of all your
expenses, including costs like groceries, transportation and entertainment. Then, compare that total to your income. If
your expenses fall below your income, you are off to a good start. On the other
hand, if your expenses are too high, you will need to find ways decrease your
expenses or increase your income.
Once you have balanced your finances so
that your income is higher than your budget, allot a very specific amount of
money for each expense. Some will be easy, like your monthly telephone bill.
Other expenses will be more abstract, like transportation. Do your best to
estimate how much you need for each item. Don’t forget to set aside some
savings each month.
Then, try living on your budget. Track your
expenses all month and try to stay within the allotted amounts. At the end of
the month, determine if the amounts worked or if you need to make adjustments.
Living within a budget can help you cover
your expenses so you can reduce your stress and even save money for emergencies
or that much-needed vacation.
If you want to become a Regular Saver then come and talk to
the experts at Sheffield Mutual - http://www.sheffieldmutual.com/
*This blog provides generic information and opinions of the writer and should not be relied upon for making investment decisions. No advice has been provided by Sheffield Mutual. If you are in any doubt as to whether a savings or investment plan is suitable for you, you should consider contacting a financial adviser for advice. If you do not have a financial adviser, you can get details of local financial advisers by visiting www.unbiased.co.uk. Advisers may charge for providing such advice and should confirm any costs beforehand. Any reference to taxation is based on the writer’s understanding of current tax legislation and practice, which could change in the future.*
