Budget Benefits: A Great Start to the New Year

For most people, when they think of budgets they immediately cringe. They think: "The fun times are over. I'll never be able to spend any money." That cannot be further from the truth.

A budget can do 3 primary things:
1. Provide a roadmap for your income so you tell your money where it goes rather than it telling you.
2. Help you achieve your financial goals.
3. Create financial freedom.

A budget provides a roadmap for your income. It tells you exactly where your money should be going. That way, you know exactly how much you can spend when you go to the department store or to a restaurant, rather than worrying later if you have enough money in the account to pay your car note, or gas, or the groceries.

The best analogy I've come across for explaining the benefits of a budget comes from the Good $ense (www.goodsenseministry.com) financial ministry materials. Suppose you were at the beach and you wanted to get into the water but you knew there was a dangerous rip current that would quickly take you under water. You would be very hesitant about getting into the water, and may not do it at all. Now suppose the lifeguards put a boundary around the area where it was safe to swim. You now know with certainty that as long as you swim within the confines of that boundary, you will not be pulled under by the rip current. Thus you can swim with the peace of mind that all is safe.

A budget serves the same purpose. It creates a safe boundary for you to use your money. Go outside that boundary and you are at serious risk of being taken under by the rip current, or worse yet, by your creditors!

A budget also helps you achieve your financial plans. It happens all too often that we know in our mind what we want to achieve financially. However, we fail to write those goals down. We then lose track of our spending and wonder why we have no extra money left at the end of the month. We, therefore, never have the money to reach our financial goals. How frustrating!

Creating a written plan of exactly where your money is supposed to go each time you receive your paycheck, helps ensure you don't consistently overspend on those items that might get you in trouble each month (for me and my family - eating out!). It also creates peace of mind that you know exactly where every dollar is going so there is no guessing on which bills to pay with which paycheck. You will then have the money necessary to start reaching those goals.

I tell people that the start of the new year is the perfect time to review your finances and develop your plan for the upcoming year. Just as people resolve to eat better, excercise more and read more at the start of each year, so too should they be establishing a written plan for their finances.

That is the goal for January: to create a budget for the New Year. I will help you do that on this blog.

Remember, budgets are not restrictive. They are actually the key to living financially free. When you have control over your money to tell it where it is going every month, it no longer controls you. Until you realize that, you really won't have any fun.