Times are hard. Coming off the back of a global recession is no easy feat and you’d think that after the near collapse of several large financial institutions, we’d have a new found respect for our finances – nope.
In a recent survey, Thomson FindLaw found that 61% of Americans don’t have a household budget or just can’t manage to stick to theirs.
This is concerning; do people really prefer the convenience of credit cards and instant loans to taking a few hours out of their day to plan and execute a household budget?
While I have no statistics pertaining to this; I maintain, that people who cannot budget will eventually be forced towards things like loans, cards and additional forms of borrowing to meet the needs of their buy-now pay-later lifestyles.
The inability of many people to successfully create and manage their budgets points towards an increasing dependence on cards and loans – purely from a convenience standpoint. Well listen up card users and abusers – if you can’t plan and stick to a basic household budget, what chances will you have with your card and loan repayments?!
A budget can arm you against the need to ever borrow money; learning to budget will also instil some good lifelong habits. I urge you to pass these habits down to future generations and look upon those without budgets, with a certain quizzical grimace.
Why should you budget?
A budget provides you with a pragmatic overview of your income and expenditures – you can set financial goals based on your income and expenses without needing to be a financial expert. Try to find areas where you’re spending large amounts of your income and then reallocate it to more essential areas like food and utilities. Budgeting gives you control and the ability to account for all of your money; knowing exactly where your money goes, instead of piecing together where it went, is crucial to your success when budgeting and will illuminate some dubious spending habits.
Why do some people not budget?
I surmise that people who don’t budget do so because they’d rather put their need for instant gratification before anything else – even when they have a budget! In short; our need for convenience (thus instant gratification) above all else is fed by logistics; we live in a world where you can order something on the internet this evening before 4 p.m. and get it the next day.
The problem with not having a budget
In the short-term, not having a budget won’t ruin you financially, but if you jump forward a few years, you’ll soon begin to realize that you’ve been haemorrhaging money because of laziness or poor spending habits. A budget holds you accountable for your spending. If you are not tracking your spending then your financial situation will not get better by itself – particularly if you’re resorting to credit cards and loans.
The benefits
In the long run, a budget can help you achieve any future goals and needs that you may have. Whether you’re looking to create a savings fund for your child’s college tuition fees, or perhaps you want to open an IRA and put 10% of your wages into it each month – a budget is a great way to visibly see whether or not you’re meeting these goals and will help you to understand where you can cut back spending, to generate additional income/savings.
Would you rather budget more effectively, reduce household costs and eventually take that vacation you so desperately need once you’ve saved enough? Or, would you rather take a credit card vacation now to immediately satiate your need to get away and deal with the consequences later?
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written by: Daniel Hilsden
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Image courtesy of Stuart Miles / FreeDigitalPhotos.net
