Budgeting 101: Why Does It Matter If You Have A Budget?
You’ve likely been told to create a budget at some point in your life. And like many readers, the chances of you committing to make a budget but failing to follow through are high. If this sounds familiar, you're in the right place.
A budget helps you build financial stability by tracking expenses and sticking to a plan for long-term (and short-term) happiness. Ultimately, your budget puts you on a firmer financial footing to deal with life's unexpected nature.
In our budgeting 101 guide, you'll learn everything you need to know about the importance of a budget. From living within your means to saving for emergencies, our guide can help you create a budget that enables you to reach your financial goals.
Budgeting 101: 5 Reasons Why You Need A Budget
1. To Reach Future Goals
Drifting through life without a solid financial plan means you'll never save enough to buy a car or house or go on the vacation of a lifetime. But a budget urges you to plan your goals, save cash, track everything, and make your dreams come true.
Writing down how much money you earn and how much goes out creates a blueprint for the steps required to reach your goals.
2. To Live Within Your Means
Unfortunately, a high portion of people spends money they do not have. And, sadly, it's down to credit cards — by the end of 2022, the average per-household credit-card-relate debt rose to a massive $5,805, according to TransUnion data.
Before credit cards were added to the financial landscape, people generally knew whether they lived within their financial restraints. They were doing well if they ended the month with enough to pay their bills and funnel into savings.
But it is more challenging now. People who use credit cards too much are only sometimes aware they are living within their means once they're up to their eyeballs in debt. And we don't want you to be in this boat. So, this might be the most important reason on our budgeting 101 list.
3. To Make Retirement Saving Easier
Sticking to your budget can also help aid your retirement savings. But you'll need to add an investment or savings portion to your budget for this to work effectively.
Put a percentage of your monthly income in your 401(k), individual retirement account, or another retirement fund. Over time, you'll build a substantial nest egg to carry you through your twilight years.
4. To Prepare You For Emergencies
As everybody knows (and the pandemic certainly highlighted), life is packed with curve balls. Whether you become sick, get a divorce, or face a costly home repair, those circumstances can put you in extreme financial turmoil, making an emergency fund vital.
You should aim to build an emergency fund with three to six months (minimum) of living expenses inside. And yes, you'll need to account for this within your budget.
5. To Reveal Spending Habits
Building budgets force you to keep a close eye on your spending. When you review your outgoings, you might realize you're shelling out cash on stuff you don't want or need; during the budgeting process, you'll rethink these habits.
Budgets allow you to make effective changes to your spending to aid your future goals and find the financial stability everyone is working toward.
Budgeting 101: Knowing Where To Get Emergency Funds
While sticking to a budget stands you in good stead to fund emergencies if they arise, you won't always have enough in your fund to cover the costs. So, you need to know where to get urgent money when you need it most.
To start with, we suggest asking family and friends. It can be an awkward conversation, but it can be beneficial with the correct parameters in place and a solid written contract. You need to stick to the repayment plan you agree on.
But if that isn't an option, try signature installment loans from us at Delaware Title Loans, Inc. instead. These loans allow you to borrow up to $1,500 to cover emergency expenses without requiring collateral — all you need to do is provide your signature to guarantee you'll repay it.
Please note your credit will be checked before approval. But you can learn more about that by contacting your local Delaware Title Loans, Inc. branch and requesting credit requirement details for signature installment loans.
Get Signature Installment Loans From Delaware Title Loans, Inc. Today!
Our budgeting 101 guides outlined why you need a budget — to prepare for the future, identify saving habits, live within your means, and more. But it will take time to build an appropriately sized emergency fund.
So, you can turn to signature installment loans for quick access to cash when you need it most. Complete our online form on this website, and we'll be in touch to guide you through everything else.
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.