A lot of people are put off by the word ‘Budgeting’ because they see it as something that is tasking or that eliminates the enjoyment of their hard-earned money. If you’re one of those with this mindset, allow us to show you why budgeting is an important step in achieving your biggest financial aspirations.
Reasons you should be budgeting:
1. Helps in goal identification
When you draw up a budget, it helps you identify your goals, keep track of your progress and make your desires a reality.
2. Enables you to monitor spending
Can you count the number of times you’ve spent N10, 000 without realizing what you spent it on? Or the days you hang out with your peers and foot certain bills without paying heed to how much hole it has dug in your pocket? Setting up a budget enables you to monitor how every naira you made is spent to the extent that you don’t spend more than you earn. This single-handedly reduces your debt exposure and helps you track your spending.
3. Helps grow your emergency fund
Budgeting helps you build your emergency fund. Let’s say you follow the 50:30:20 rule where 50% of your income goes to budgeted fixed items, 30% on variable items and 20% to your savings; you would be putting away 20% of your monthly earnings into your emergency fund which could be your investment account. Now, imagine how much you’d have compounded should you invest that amount every month for several years. It would be more than enough to meet so many of your life goals.
If you have any unexpected event that requires immediate spending, you can review a few items in your budget to squeeze out the income or move some items on your budget to the next month. It’s all about flexibility when it comes to budgeting.
4. Helps you prioritize spending
Now you don’t have to buy what you don’t need. By sticking to your budget, you only spend money on the most important items/things.
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