We never stop hearing about the importance of budgeting in our day to day lives and this is rightly so. The substantial benefits far outweigh the time cost both in the short and long term. In our current market climate budgeting is more important than ever to ensure you and your family have financial security and are working effectively to achieve financial or lifestyle goals.
1. Have set goals and objectives you wish to achieve
A budget can help you determine your long-term goals and put you on the path of working towards them. Having a set criteria or map of how to allocate your spending will ensure you can live within your means and work towards the purchase of those items such as a new car, down payment on a house or even a family holiday.
2. Ensuring you don’t spend money you don’t have
Discretionary spending is one area where consumers have always spent more money than they have – we seem to owe it all on credit cards. A recent study by WalletHub determined that the average credit card debt per household reached $8,377 in 2016. This goes to show that we are spending on credit rather than using saved funds to cover our lifestyles.
3. Ensure you are happy in retirement
The importance of contributing a portion of your funds from your budget to investments will become more evident in later years. Setting aside a set portion of your income in your budget to be used for retirement and investment purposes will help you build your ‘nest egg’.
4. It helps to be prepared for emergencies
You can never really know when the unexpected will occur, as life is filled with surprises, some good and some bad. Having an emergency fund helps you have peace of mind knowing you have funds available should the need arise. For most of us this would be between three to six months’ worth of living expenses – this is something to also build into your budget. It doesn’t need to happen overnight rather, it can be built up over time.
5. Budgeting will help address bad spending habits
Building a budget forces you to take control of your spending habits. This may help you to notice certain items or areas you are spending more than necessary on. Often asking yourself the question whether this is a necessity will help you determine its cost/benefit to you. This will assist you to rethink the way you spend money and re-focus your financial goals and objectives moving forward.
Meeting with one of our financial advisers will assist you towards identifying goals and objectives. By formalising these, you have something tangible for your budget to achieve at this point, you and your adviser can discuss to improve your budget and work towards achieving goals. Call us on (07) 3284 7875 to speak with us today.
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