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Why is a budget important in day to day life

Your budget can be adaptable to your situation and can evolve as you move through different stages of life. But why is it so important? Read on to find out.
Why is a budget important in day to day life
A budget is a comprehensive plan that aligns your spending with your goals, income, and expenses. Some people prefer to do this record keeping manually while others use a spreadsheet or budgeting applications.
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You might have studied budgeting in college, at school or at home. You may also be hearing about how you need to maintain a budget so you can save, spend, plan and protect your money. Why is a budget so important for your money though? What role does this word play in your financial life? This article brings all these answers to you in the most simplified manner.

Meaning of Budget

A budget is a comprehensive plan that aligns your spending with your goals, income, and expenses. It is a forecast of what money you make and how much you spend during a particular time. If you are maintaining financial records for your entire family, it is called a family budget. 

Budgeting can be done in various ways. People can either focus on sundry expenses or specific categories. Some people prefer to do this record keeping manually while others use a spreadsheet or budgeting applications. The 50/20/30 budget technique is a great way to manage your money. It means that you have to spend 50% of your monthly after-tax income on necessities, 30% on things you want, and 20% on savings. 

What purpose does a budget serve?

Budgeting means using money effectively. Making a budget is not a hassle but a plan to give you more control over your money. The budget can be adaptable to your situation and evolve as you move through different stages of life. 

Importance of budgeting

Budgeting is important for every person. It motivates a person to save more and put their money to the best use possible. Here is why it plays an essential role in your life.

  • Reduces tension

Budgeting helps in making financial decisions more easily and reduces the burden. This reduces stress and brings relaxation in life.

  • Manage debt

Preparing a budget helps to stay ahead of debts and reduce overspending on miscellaneous desires. 

  • Have a worry-free future

A good budget pushes you to save for emergencies, and stay relieved in case of any uncertainties.

  • Understand how to manage money

Maintaining a budget helps you to understand how much you need to save, and spend on things. It helps you come to terms with how much you need to spend, and if you are doing it in excess or deficit. 

Where to start?

Have you also made up your mind about being financially responsible? It’s easy to start, all you have to do is create a spreadsheet or book where you will outline your income, mention debt & other balance, and your expenses. That’s it, you are good to go!

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Author

Picture of Devanshee Dave

Devanshee Dave

With over 4 years of experience in financial writing and a master’s degree in mass communication & journalism, Devanshee is currently preparing for her CFA (Chartered Financial Analyst) exams. In her spare time, she likes to dance and learn about cosmology, astronomy and anything that can expand her knowledge from the big bang to the big crunch.

Editor

This page is purely informational. Beem does not provide financial, legal or accounting advice. This article has been prepared for informational purposes only. It is not intended to provide financial, legal or accounting advice and should not be relied on for the same. Please consult your own financial, legal and accounting advisors before engaging in any transactions.

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