Are you tired of living paycheck to paycheck? Do you feel like you can’t make a dent in paying down debt? Are you unable to develop a beneficial savings account? You might need to consider making a budget.
Budgeting is a sure-fire way to help you become familiar with your finances. Creating a budget also helps you develop a relationship with your money. One of the best benefits of budgeting? It can get you out of debt – as long as you stick to it for a while.
We know, we know… making a budget sounds about as much fun as cleaning the house. The good news is that your budget doesn’t have to be an awful experience – it can really help you!
A budget is an estimate of income and expenses for a set period of time, according to Dave Ramsey. Budgets are assigning your money to go towards things you have to pay for, like your mortgage and car payment. It also gives your room to assign money towards things like eating out at restaurants.
If you’re wanting to pay off debt fast, Dave Ramsey recommends the zero-based budget. A zero-based budget is to make your income minus expenses equal zero. This means that your giving every dollar and cent a job. You tell your money where to go.
For example, if you pay all of your expenses for the month but still have $350 left over, then you’re budget is incomplete. You have to tell that $350 where to go. In this case, it’s beneficial to throw it towards debt or savings, rather than thinking you have that $350 to go shopping on. When you start sending that excess to debt, you will be amazed with how much faster you’ll be able to pay it off. According to a survey from Financial Peace University, those who do a zero-based budget pay off 19% more debt and save 18% more money. This happens just from telling your money where to go. If you start now, you’ll see your debt go down and wealth go up faster than you think.
If you are new to budgeting, you might not think that there’s anywhere you can make more room in your budget appear. If there’s a will there’s a way, here are some tips on how you can make a budget and help cut your monthly expenses.
With budgeting it can feel like you’re having to cut back on the things you love – but you don’t have to! You can manipulate your budget to make room for things you enjoy, while saving money and paying down debts. The beauty of budgets is that all of them are different. Yours will look different than the budget your parents, friends, or coworkers use. You are able to change your budget each month until you can find one that works for you and your financial goals.
Lending Studios tip: don’t look at your budget as not allowing you to spend money, think of it as showing you where you have the money to save and spend. Budgets don’t have to prevent you from living life to the fullest, they’re there to help you achieve financial freedom.