Budgeting benefits personal finance.

Money management skills and benefits of daily budgeting your finance.

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Money Management Part 7

Benefits of setting a budget

Controling finances is a principle of economics that is practiced almost everywhere. Corporations have comptrollers or finance divisions, government have departments of finance, formal and informal groupings ---including business enterprises--- have treasurers and auditors to establish control over the group’s funds. And of course, households and families have the father, the mother or one of the children to hold the purse strings.

However, finance control does not appear to be a conscious effort for many individuals. Not many practice budgeting their personal expenses, so that one-day millionaires are a dime a dozen in many communities. Just go to taverns and nightclubs on payday nights and you will agree with me.

Yet budgeting personal funds is as necessary for individuals as it is for corporations, for the simple reasons that money supply is finite no matter of its quantity, and that it is better to have money to spend when needed than none at all. In many instances, money is the solution most immediate problems.

Budgeting your personal finances gives you several benefits:

1) Control over your expenses and thus your economic future. You know on what and how much you will spend within a timeframe, in the short and long terms. Therefore, you assure yourself that you will have the funds when it becomes necessary at a future time. This is the rationale applied on pension fund management: you save so you will have funds after you stop having active income sources.

2) Heightened responsibility of your finances. The decision to spend your money is yours and yours alone. You cannot blame anyone else when you have exhausted your funds. As you learn more and more how to budget your personal finances, you learn to resist the little pricks of desire to spend on unnecessary or unimportant items. This growing sense of responsibility can be applied to other areas so you become a better person.

3) Develops your decision-making abilities vis-à-vis priority expenditures. Beyond the ‘must-pay’ items, your options are almost limitless. But when you have a budget, it will be easier for you to suppress the impulse to purchase things not in the list. Likewise you will develop the ability to juggle your funds depending on the priority requirements or small desires. For example, you may decide to modify and lessen your food expenses for the week so you can eat in a fancy restaurant during the weekend. You can decide to do that without going out of your weekly budget. So you get your desire and still retain financial discipline.

4) Enhances your decisiveness in terms of making and achieving short-term and long-term financial objectives.  Decisions on what and how much to spend on need to be made everyday and in every conceivable situation. When faced with temptation to spend on a fanciful whim today against saving for tomorrow, you can fare better if you have a budget plan. For then you will have guidelines how to spend your money.

Controlling your finances by budgeting it is definitely advantageous for you. So, give it a try?

Money Management Part 8

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