The thought of creating a budget or “spending plan” as we like to call it, is usually a very daunting task to think about. Most people don’t want to think or discuss their finances, let alone write it down! It takes time to look at what you’re spending, how much you spend and how much income you’re bringing in to cover those expenses.
If you have dreams of someday buying a home, car, paying down debt, starting a family or paying for your children’s education, having a spending plan is vital to securing your goal(s).
A balanced money formula says that you should have 50% of your money for bills/needs, 30% for wants, and 20% for savings. That may not be possible if you’re just starting out, but it’s good to have that in your sights.
Five reasons you need to create a spending plan are:
1. To set and reach financial goals
2. To spend according to your priorities
3. To build wealth
4. To plan for retirement
5. For peace of mind!