A personal budget helps us reduce financial stress

What prevents us from preparing a personal budget

Most of us don't even think about it, that we need to prepare a personal monthly budget or spending plan. We think, that budgets are for people, who spend uncontrollably or have financial problems. What is my budget for if my money lasts until my next paycheck, I pay my rent, bills and loan installments regularly and on time?

We usually treat monthly budgeting with apathy, we postpone or find other 'more important' tasks - we just don't care. We think, that it is tedious to record every expense or check the excel file for availability in the budget before spending a certain amount. Another reason to avoid budgeting is thought, that the budget will limit us, will tell us what we have the right to do with our money and we won't be able to spend on the things we want. It is also possible that we do not have enough technical knowledge of exactly how to prepare a budget. Or we just don't want to think about money, or for their lack. Let's worry, that preparing a family budget can lead to arguments and conflicts with the partner and therefore simply avoid this activity.

What are the benefits of preparing a personal budget?

The most important step in changing our attitude is to look at perspective and find out why we need the personal budget and what are the specific benefits for us of its preparation.

♦ When we prepare a budget, we have a view of the big picture and are able to consciously define our own priorities, financial and life goals. After that, every month to take concrete steps towards them, without being distracted by unplanned trips.

♦ If we have loans or credit cards, we see clearly how much of our salary goes to paying for them every month, instead of building our wealth. We'll want to get out of debt as soon as possible and start putting more and more money towards paying it off, and when we succeed, we will release a resource, which to direct towards our goals.

♦ Contrary to popular belief, budgeting actually gives us a bigger freedom and control. We start to control things, because instead of the budget telling us what to do with our money, we tell our money what to do. We assign a task and purpose to each lev at the beginning of the month. We can spend money on pleasures, fun and vacations without feeling guilty, as we will know, that we have allocated money for this very purpose.

♦ We have tool, which shows us clearly and vividly in which areas we spend more than we want or think, that we spend. We will begin to question costs, which we have not thought about whether we need them. What do I prefer, my financial freedom or this dress? My financial freedom or this phone? We will see how impulsive spending and buying unnecessary things prevent us from achieving our true goals.

♦ Making a personal budget, will reduce stress related to money and we will free ourselves from a huge mental burden, which we carry with us everywhere, as money creeps into our thoughts, whether we want to or not. Budgeting gives us system to organize the things, that worry us and engage our attention in the realm of personal finance. Just like we feel anxious, when our room or desk is untidy, and we feel peace right now, in which we arrange them. When our life is organized, we have a sense of well-being.

♦ That doesn't sound logical, but when we start budgeting, we will think about money less, and no more. We will separate 1 hour a month and we will know, that we have taken care of and organized everything in this area of ​​our lives. When we spell out our plan, it seems achievable. Just like we feel tense, when we have many tasks on our minds, and as soon as we write them down on a piece of paper, we feel inner peace. A personal budget is a way to unload our short-term memory and free up space in our minds for the things that matter to us.

♦ The people, who are successful with money they have a plan and they follow it. We cannot become successful by ourselves, we need to plan it. When we build a building, first we prepare an architectural project. In the same way it is necessary to prepare project to achieve our financial peace of mind and prosperity, and the budget is the basis of this project.

♦ We will feel the same we got a promotion. What is the feeling we feel, when we find forgotten 100 leva in the pocket of an old coat. That's how we'll feel every month, when we prepare a budget. We will constantly find money, that we didn't even suspect we had. We will begin to find new and new opportunities to reduce our costs.

♦ We will be a good steward of your money and we will take care of them. We will begin to track and target our income and expenses consciously. We will start saving, and then to invest.

♦ We will improve our communication with the partner. Making a family budget makes people communicate with each other, to share what is important to each of them, to make conscious compromises and determine their common priorities and goals.

The personal budget is a plan for our expenses for the respective month. When we prepare a budget, we 'spend' our money on paper in advance. When we do, we take control – we tell every lev what to do at the beginning of the month. After that, we just aim to stick to the plan and spend only the amounts, which we have planned ourselves. And at the end of the month, we compare the planned and actual amounts spent, we are changing plans for next month, and if necessary – we optimize the cost feathers and update our goals. Even if we fail to plan every expense in the beginning, usually after approx 3 months we manage to plan with 95% accuracy your expenses. All this takes us no more than an hour a month. And if we combine it with an activity that is pleasant for us, such as drinking coffee, snacking on chocolate or something else, which brings us delight, we may turn monthly budgeting into a favorite ritual.