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Many people ignore the question of why budget. They think that it is too much trouble. It will take too much time. It is so difficult that it is not worthwhile. I can do just as well without it. What many people fail to realize is the fact that a budget is simply a plan for the spending of money. If you do not plan how you spend your money, you will have very little if any control over your financial life. If you do not control your financial life, it will probably control you. When it controls you, you probably won't like the results.
Let me show you what I mean. I recently read an excellent article entitled "Roadmap to Success." This article was written about one's life goals. It showed that if you do not establish goals, clearly define them, and even write them down, it is just like taking a cross country trip without a destination in mind, or a roadmap to give you direction. You may have a general sense of going, but that is all you are doing, and it is pointless travel.
So, why budget? A budget is simply a plan. It is the plan for your financial life that is dictated by your plan for life. It will allow you to define your goals and provide the roadmap that will direct you. The quality of that budget will determine the success of your journey.
A good budget is going to let you control the two factors, income and expenses, that make up your budget. When you control these factors, your options are infinite. This budget is going to let you define your goals, provide direction to those goals, and allow you to reach them. You will have control over your financial life. Once you have control of your financial life, you will be in a great position to reach your life goals.
Let me show you what I mean. Your life goals will determine your income needs. Whatever your goals are, you should have an idea of how much money is going to be required to reach those goals. This will determine whether you work for someone else or not. It will determine whether you work for minimum wage or less or require a much higher paying job. You may need to become an entrepreneur with an unlimited earnings potential. You may decide to steal for a living or let the government provide for you. What ever your goals are, if they are properly defined, they will determine your income needs.
Expenses on the other hand should be controlled by income. You determine the allocation of money toward expenses. You determine how much of your money goes where. You decide, if you want to live paycheck to paycheck, save something every paycheck, or go into debt. Your goals, along with your income, will allow you to budget your expenses.
The answer, to the question why budget, is that you need a plan. This plan is going to give a destination for and direction to your financial life. It will allow you to monitor your progress. It will allow you to make adjustments. It will provide you a much greater opportunity to achieve your life goals.
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