5 Reasons Why You NEED A Household Budget

It's time to set the record straight - budgeting isn't just for people with lots of money, barely any money, or too much time on their hands. Budgeting is an essential skill that every adult should possess. It doesn't matter if you plan your expenses ahead of time so that you only spend certain amounts in certain categories, if you tally up your expenses at the end of the month to see how much you spent, or if you choose to handle it a different way entirely. What matters is that you do it.

Why You Need A Household Budget

If you think budgeting can't benefit you, think again. The truth is that no matter how much your weekly, monthly, or yearly income is, tracking your finances can help you become (even) more financially successful. Here are a few reasons why it is important to maintain a household budget, courtesy of First Bank of the Lake.

1. Know Where You Stand.
First and foremost, budgeting offers a valuable glimpse into your current financial situation. Without carefully tracking your expenses, you'll have no way of really knowing whether you are in the black, in the red, or breaking even on any given month. You can't plan for the future until you know where you are in the present.

2. Prioritize Your Spending.
What do you consider to be your most important expense categories - groceries, gas, mortgage/rent, or something else? Are you putting more money towards these important categories than the less important ones, like restaurants or shopping? Tracking your spending is the only way to identify how much you are actually spending in each category. By maintaining a consistent budget, you can prioritize your spending accordingly.

3. Plan For The Future.
Once you identify your current situation, you can make a legitimate plan for the future. Depending on what your present circumstances are, you may make plans to pay off debts, save up for a down payment on your first home, plan for retirement, or any number of other financial goals.

4. Track Your Progress.
Budgeting is not a "one and done" process. Once you determine where you currently stand and what plans you want to work towards, you can use your budget to track your progress towards achieving your goals. If you quit budgeting, you'll have no way of knowing whether you are getting closer towards (or further away from) your goals.

5. Be Confident In Your Finances.
The best part about maintaining a consistent budget is that it gives you the peace of mind that can only be achieved by knowing exactly what your financial situation is. By tracking your expenses, you'll know exactly whether or not you are able to afford a bigger purchase you may wish to make, such as a new car or a new flat-screen TV. If you don't have the money to make the purchase right now, you'll be able to make a plan to save up for it. 

First Bank Of The Lake Is Here To Help!

Trust us - it's never too soon (or too late) to build a household budget. Even if you've never attempted it before, you can become a budgeting pro simply by applying yourself. If you're trying to figure out where to begin, see our earlier blog post with sample budgeting strategies you can steal.

Happy budgeting!

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