What is a budget? It is the main and basic component of your financial plan and it is not the same as a spending plan. In a budget, you will know how much money you will spend and how much money you will save for your future.
When you budget, you need to know exactly what you will be spending your money on. There are some activities which you might spend money on without thinking of the consequence. These expenses include going out with your friends, going shopping, and buying gifts for your loved ones. Spending money on these activities will give you a sense of pleasure but you will not gain anything. On the other hand, you might spend money on something that is important to you, and it will give you a feeling of satisfaction. If you spend money on something that will bring you pleasure, you will want to do it again and again. You will end up spending money on unnecessary items.
The reason why budgeting is not a good idea is because of several reasons. Some of you might have already experienced this, but still let me explain in detail what are the major problems of budgeting.
Not saving enough money
Many people say that they have a very bad budgeting habit, but this is just an excuse and not the truth. Most of the people never save money; they only spend it. They don’t consider the future and save only to spend in the future.
If you are one of those people then you need to make a change. You should set a goal to save money for your future. There are some basic tips to save money, like taking the bus instead of driving a car, cooking at home instead of eating out, etc. These small changes will make a big difference.
Not having a detailed budget
Most of the people use budgeting as a tool to control their expenses and to keep a track of their finances. But budgeting should be a part of your life, not something that you do for a day and then stop.
In a detailed budget, you should list all your expenses like rent, utility bills, food, etc. Also, you should know the total amount of money that you spend on a monthly basis. You should compare your expenses with your income and if you are able to reduce your expenses then it is a great achievement.
In case you don’t have a detailed budget then you can create one and keep it in a safe place. You can even make your budget online.
Not making any plans for the future
Budgeting is nothing but a tool to plan for the future. When you save money and pay less, you will be able to save more and pay less. This will make your savings a lot more than you think.
Also, if you have set a specific goal, then it will motivate you to reach that goal. If you don’t have a goal, then you will not be able to make any progress.
Conclusion:
If you want to save money, then you need to set a goal and you need to stick to that goal. If you want to improve your finances then you need to start a budget and you need to make a detailed budget.
