“Why do I need a budget?”
When discussing personal finance or stewardship. One question comes up when I start talking about budgets.
“Why do I need a budget?”
I normally respond, “The same reason you need a map or a GPS.”
A budget tells you how you are going to get to where you want to go. Of course, that assumes you already know where you are and where it is you want to go with your money. Many people don’t. A budget will also answer the question “Where am I now?” from a financial perspective.
Why do I need a budget?
It is possible to get where you want to go without a map or a GPS if you are familiar with the area and you pay attention. However, if you are in unfamiliar territory or don’t pay close attention then it will be difficult to get from point A to B. Don’t think of a budget as a chain to keep you in line. It is a tool to achieve your goals. You can use it to get out of debt, or to give more to those in need or what ever goal you feel called to.
How can I set up a budget?
Setting up a budget can take many forms and I will talk about them at length on this site. But, first I want to give a general overview of the concept.
Know where you are.
Many people I talk to about their finances don’t have a very good idea of where they stand financially. I ask them to keep track of every penny for thirty days and to break down their spending in to different categories. This can be done in a notebook, on a smartphone or with something like mint.com but doing it will give you some good information.
You will know where your money is going.
You will know where it isn’t going. (Which can be just as important)
You will know if you are spending more than you are making regularly.
These answers will give you a good idea of where you are financially. It may not be a pretty picture, but it is your picture and now you know what you can do to improve it or overhaul it completely.
Know where you want to be.
You really can’t make a plan until you know where you want to be. Do you want to spend less so you can get out of debt? Do you want to be able to give more to your church or ministry? Do you want to stop losing ground and spend less than you make?
These decisions are, of course, very personal ones and it is something you will need to decide on your own (with your spouse) or with good council. Getting an outside opinion can be embarrassing but I have found that asking someone who isn’t emotionally involved in the details can often offer insight you wouldn’t have gotten otherwise.
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