Freelance Writing Jobs | Today's Articles | Sign In

The Importance of a Budget

How Important is Formalized Personal Money Management?

May 20, 2009 Johanus Haidner

Realizing and understanding the importance of making a money management routine is something most people never do. Why would anyone want to do something like this?

Money management is something that many people dread the thought of. All those numbers, analysing what happens with all your money, and making a formal budget. These are all things that most people never learn to do. And they never learn why. Yet, if this is done, it can make life a lot easier and give a feeling of control and riches that are not experienced otherwise.

The Advantages of a Proper Personal Budget

If someone has a proper budget, then that person:

Knows exactly how much money she has at any point in time.
Understands the flow of money both into and out of the household.
Is better able to plan for the future and make decisions based on what she really wants out of life.

For example, if this person knows exactly how much her fixed spending (bills that don’t change much, such as rent/mortgage, utilities, insurance, fuel…) is, then she will be able to better decide what to do with the areas of spending that are more flexible (such as groceries and entertainment). As well, then that person understands the why of each expense and is able to better look for deals – ways to save money on each expense, both fixed and not fixed.

In all, this allows the person to have more “extra” money at the end of each month. And then she can decide what to do with that money, whether it be pay down some bills, invest it, or simply spend it on something fun, like a vacation or some new clothes. Doesn’t everybody want to know their money better?

What are the Disadvantages of Budgeting?

Well, it does take more time than not. Is peace of mind a disadvantage? Anyone who does a budget is going to have to learn a little bit about their finances. This actually means learning where you are spending and tracking all of the expense, even those that you may not notice before the budget exercise. Yes, this means all items! So it takes time and effort. That’s really the only drawback to budgeting – taking the time to do it!

How Does One Get Started?

There are several sites online that allow downloads of free budget spreadsheets. There are also courses available. Sometimes your city’s continuing education department will run short courses on personal money management. These are hands on and very good for most people. And the expense usually isn’t too much.

Share Article |

The copyright of the article The Importance of a Budget in Personal Budgeting/Finance is owned by Johanus Haidner. Permission to republish The Importance of a Budget in print or online must be granted by the author in writing.