CREATING YOUR BUDGET: YES OR NO?
When we hear something was made “on a budget”, we immediately assumed it is low quality and people suffered to get it done. The word budget is associated with hardships and having no time or money for fun. This perception could not be farther from the truth.
Creating a budget is especially hard for young people, they are prone to improvisation, impulsive purchases and accumulating debt. Not many have the information necessary to make smart decisions when it comes to their money, young people are rarely interested in how to handle their money.
COMMON ROADBLOCKS TO SUCCESSFUL BUDGETING
There is nothing wrong with living on a budget, this means you live your life responsibly and have a smart attitude when it comes to your finances.
Some of the wrong perceptions that make people fail or not even consider having a budget are:
HAVING THE WRONG IMPRESSION
Having a budget means that you have control over your expenses and finances, it means you are able to pay your debt fast and have enough savings for emergencies. Saving money could lead to having that dream vacation or buying your own house. Having a budget will help you make the most with your current income without gaining any new debt.
DON’T MAKE IT COMPLICATED
When creating your budget, keep it as simple as possible. Do not forget about spending some money on entertainment and do not make more cuts than necessary. If you keep a comfortable lifestyle while living on a budget, you will accept it naturally as a part of your life.
CREATING YOUR BUDGET AFTER SOMEONE ELSE’S PLAN (MAY NOT WORK FOR YOU)
Other people may have more experience with budgets and have a certain way of doing things but what works for them may not necessarily work for you. Your budget must be created around your income, keeping in mind your expenses and those little pleasures things you cannot quit.
MAKING YOUR BUDGET TOO RESTRICTIVE
Having a budget does not mean you will stop having fun or going out, it only means you will limit how much money you will be spending on those things.
A restrictive budget will make you reject things you like, increasing the chances of you not following it and being more prone to impulsive buys. But successful budgeting doesn’t cut you off completely from any hobbies or partying you want to do, just that you have to think more carefully about your purchases.
HAVING NO CLEARLY DEFINED FINANCIAL GOALS
Before creating your budget, you need to establish your priorities and also set your goals. Having financial goals will motivate you to follow your budget. Having priorities will help you decide which aspect of your life requires more money and attention.
LACKING AN EMERGENCY FUND
Life is unpredictable and you must be prepared for any eventuality, you must have an emergency fund. Your budget must include your emergency fund, increase it on a monthly basis and you will find yourself prepared for almost everything.
GIVING UP TOO SOON AND TOO EASILY
You will not feel comfortable on the first month living with a budget, in the second month either, you must give it time. This smart way of living requires some getting used to, but soon you will see small changes in your finances and life in general.
Always remember; it takes a smart person to make money, however it takes a smarter person to hang on to it.