Most people, even financially responsible ones, never quite get around to making a budget. Either they don’t really know where to start, they don’t think they need one, or they just plain don’t want to. Most of us would rather spend on things as they come than be bound by a budget.
But now that you’re a few weeks or months into your first job out of college, you may be finding that taking care of all your bills isn’t as easy as you thought it would be.
Are you looking for a solution to your cashflow problem? A simple spending plan is a great place to start.
So What Will It Get Me?
We’ll admit, even a basic budget takes a little discipline and foresight. But the payoff may be bigger than you think.
It’s good for you, seriously.
When you don’t keep track of where your cash goes, you may end up with more month than money. But by implementing a budget, you’re forcing yourself to stay within your means. No more spending more than what you make and accumulating even more debt and bills to pay off.
You’re in control.
With a budget, you decide what happens and when, instead of being dictated to by your dwindling bank balance or what’s left of your credit card limit. And forget about those overdraft fees and late charges. You’re saying goodbye to the days of spending money you don’t have, and you’ll no longer have to make payments past their due dates since you’ll have cash on command.
Passing on plastic has its own rewards.
As you rein in your credit card spending, you’ll no longer be slaving away just to pay off the interest on those high balances. Save the plastic for emergencies and only splurge on your high-ticket items once you’ve got enough cash saved up to pay for them upfront. That $499 surround-sound system isn’t such a great deal after you’ve paid a year’s worth of 25% credit card interest on it.
Not only that, but as soon as you start carrying a card balance that goes over half your limit, it can drag down your credit score. By using your credit cards only as a last resort, you can protect your credit, and you’ll save hundreds, if not thousands, of dollars in interest that you can put toward other things you need or want.
You’ll have peace of mind.
No more living from paycheck to paycheck, it’s as simple as that. You’ll leave a lot of nagging stress and worry behind, knowing you have the money you need when you need it, along with an emergency stash for those inevitable unexpected turns of events.
You’ll make progress instead of running in place.
If you’re barely keeping your head above water—only making the minimum payments on your credit cards while running up more charges, always playing catch-up on your bills, never having any extra money in your bank account—you need to break out of that hole. Otherwise, you’ll be paying off your cards forever and always running dry on funds.
A budget might hurt at first, but it’ll allow you to get financially caught up. And once you’ve got your monthly expenses under control, you’ll be able to set aside savings, pay off your debt, invest wisely. For the first time, you’ll be able to plan for a debt-free future in which you actually have money that isn’t already spoken for before you’ve even brought it home.
Putting It All Together
If you sometimes feel like you’re fumbling in the dark with your debt, knowing where you want to end up but finding yourself stumbling and traveling in circles, think of a budget as giving yourself a flashlight and map. When you’ve got a map for where you’re going, it’s a lot easier to get there.
So where do you start? How do you go about mapping your way?
Read on to Part 2, where we give you five easy steps to building a debt-busting budget.