WHY DOES A BUDGETING SYSTEM MATTER?
By Lawal Abdulmalik
A budget is simply a plan for how you will spend your hard-earned money. So, budgeting is a crucial thing for you to consider in your day to day activities.
The more you earn, the more you spend – it’s almost as though you treat this spending pattern as some sort of milestone. However, if you spent so much, there is no way you will have enough left on you.
To budget is to balance your income with your expenses. Your starting point will be to limit your expenses within what you earn. So, if you want to spend more, you will first think of a way to make the additional income first, rather than incur new costs and stand there dumbstruck at a bill you can’t pay for.
Income > Expenses = Good
Income < Expenses = Poor
Do you really need a budgeting system? 🤨
You might think “why do I need to budget my money, as long as I use it to buy what I want and need?
That is a good perception, but human wants are unlimited and that’s why you need to draw a scale of preference. A scale of preference vertical list of your wants, according to how you prioritise them. Starting with the most important one at the top, your list of needs/wants will drop down to the least important at the bottom.
Here’s an example👇:
Say, you are a college kid. You can decide to spend of your weekly allowance every day. This means that you will spend of your allowance in a week and the remaining will be available for any emergency or unexpected needs.
Plus points ✨
Budgeting will also help you to know when you are overspending, be flexible about your wants and help you reach your goals ASAP. Budgeting is especially useful if you are looking to pay off your loans and be debt-free, at least a day earlier.
If you take your budgeting system seriously, it’ll serve you as a way to discipline your life overall, stop living paycheck to paycheck and keep you satisfied for longer.
In a nutshell, a budgeting system is a must to indulge in if you want to create a good spending habit and be in control of your income and expenditure. It helps you understand where you stand today financially, forecast where you can get if you improve your habits and hint how to get ahead of your game.