What is Budgeting?

What exactly is budgeting? What’s a budget?

Budgeting means making a plan for how you will spend your money. A budget is “THE” plan for how your money will be spent. By making this spending plan, you can figure out ahead of time if you will have enough money to do the things you need or want to do.

If you don’t have enough money to do everything you want to do, you can use this planning process to prioritize your spending and put your money toward the things that are most important to you.

Why Is Budgeting So Important?

Since budgeting lets you make a plan for how you will spend your money, it makes sure that you will always have enough money for the things you need and the things that are important to you. Having a budget or plan for how you will spend your money will also keep you out of debt or help you get out of debt if you are already in it.

What About Making Budget Plans And Forecasts?

Once you’ve made your first budget, are using it, and beginning to understand how it can keep your finances on track, you might want to make a spending plan or budget for the next six months to a year. By doing this, you can easily predict which months may be hard on your finances and which ones will give you extra money. Then you can look for ways to even out the ups and downs in your finances to make things easier to handle and more pleasant.

By extending your budget into the future, you can also estimate how much money you will be able to save for important things like a vacation. A new car, your first home or home renovations, an emergency savings account, or your retirement are all long-term plans you can plan long term. Creating a realistic budget to plan your spending for the year can help you plan your finances for the long term. You can then make reasonable guesses about your annual income and expenses and plan for long-term financial goals like starting your own business, buying an investment or vacation property, retiring, or anything at all that money can help you attain.

Click here to Learn how to make a spending plan and a budget.