When it comes to the household budget, most people think of it as a tool to either get out debt or stay out of debt. While a household budget can help you to do both of those things, when it done properly it is also the tool that allows you to enjoy some of the finer things in life and is the first step in achieving financial security.
Learning to budget correctly and then living within that budget can help you to find those wasteful things that are keeping you from building that savings account, buying the home of your dreams, or will prevent you from retiring while you are still young enough to enjoy it.
Budgeting correctly isn’t about sacrificing so much as about identifying and finding ways to curb the expenses you don’t need, and probably aren’t even aware that they are holding you back financially. For example, some studies suggest that stopping for that coffee on the way to work each morning costs the average American around $1100 a year, and eating lunch out while work, costs 2 to 3 times that much. By cutting those two unnecessary expenses in half it is possible for most people to save $1000 a year. While that is a nice amount added to savings the truth is that most households spend at least 3 times that amount of money on unnecessary expenses. Putting that amount of money each year in savings account or investing it wisely could provide financial security for you in the years to come.
The Pre-Budget Journal
Before actually sitting down to establish that budget, you should keep a pre-budget journal. In this journal you should write down every penny you spend and what you spend on. This will clearly let you see just where your money is going, and what wasteful things you are spending your money on. It also allows you know which expenses you can cut down without feeling as though you are making a major sacrifice.
Once you are ready to actually sit down and make your budget, one of the first things on your budget should be that savings account. Taking a bit of that wasted money each money and putting it directly into savings will earn you interest and actually increase the amount of money you are making. From there as your savings account builds you can look into money market accounts, and other means of putting some of that saved money to work for you.
A Budget Changes The Way You Look At Money
Over time having a budget changes the way you look at money. No longer will you view it as a necessity needed to survive, but as a tool that can help you to achieve all those goals that you want to achieve. For some, a budget will simply give them the piece of mind that comes from knowing you won’t have creditors knocking on your door, for others it will allow them to plan for a brighter future, and still others will be able realize that dream of an early retirement, owning their own business, or simply knowing they have something to pass down to their own children.