- Is a written plan for how you intend to spend your money each month
- Outlines financial contributions to savings and retirement etc.
- Helps you live within your means.
- Is a financial life raft, when consumed by debt
By sticking to a budget and following the rest of the advice DebtBusters has to offer, your financial situation will improve. Though, after your financial situation is looking better, you should continue to manage your money by using a budget. Otherwise, you may become careless about your spending or begin to use credit too much, thus your debt may begin to increase again.
Living on a budget will make it easier to:
- Build up savings so you have money to fall back on in difficult financial situations, such as when unexpected expenses occur, you lose your job, or salary decreases
- Purchase big-ticket items with minimal use of credit
- Make your family’s financial dreams come true – a new home, great vacation, and college educations for your kids, a comfortable retirement.
Building a budget
Creating a monthly budget for your household is not a complicated process, but it can be time consuming. Simply stated, here’s what you need to do:
- Compare current total spending to current total income
- Reduce spending as necessary so it’s less than your income
- Allocate money appropriately so you are able to pay all your living expenses and debts