4 Reasons Why You Need A Budget
I find it ironic that I should be talking about budgeting and why you, your neighbor (and maybe even your dog), need a budget. I went for years, decades even, without a budget. I figured that as long as I didn’t overdraw on my checking account, why should I have a budget? I wasn’t Donald Trump, where I needed reams of paper to tell me about my vast assets and investments. If I stuck 25 cents here or 50 cents there, who cared?
Besides this, I assumed that budgets were boring to follow and frustrating to draft. I used to watch my husband work long hours on his Quicken-powered budget, imputing everything from our monthly rent payment to the Caché brand blouse I had bought on the sly. I could never follow his budget program, nor keep to reporting my every purchase in that program. Perhaps that is one more reason why we are now divorced? Who knows.
In any case, and thanks in large part to my now diminished earnings, I have come around to the idea of starting and maintaining a monthly budget. Furthermore, thanks to automated budget programs, such as the one found on Mint.com, keeping track of my spending is easier than ever before (for a full review of the Mint.com program, click on my post here).
Still have doubts on whether a budget can actually help you track and even save your money? Read on for the 4 big reasons why you need a budget:
1. A budget tracks your spending like you will never do. Whether you make $100 or $10,000 per month, it’s imperative that you know where your money is going. Otherwise, you’ll miss important things like incorrect charges to your bank and/or credit card accounts. You’ll also forget about your "little" shopping sprees on $35 bottles of shampoo and conditioner (I’m speaking from personal experience) or your "small" purchase of food for your last barbeque. These expenses add up, and fast. If you’re always short on cash, wondering how come your entire paycheck is going to pay off just a portion of your credit card bill, your budget is the place to look.
2. A budget alerts you of upcoming bill payments. I don’t know about you, but for me, bill payments are the last thing on my mind. I have to place the bill right in front of my nose if I’m to remember that it needs to be paid. Otherwise, weeks, even months, will go by before I finally pay the charges.
A budget program changes all that. Now that I have bill payment alerts set up, I get e-mail reminders which tell me that a certain credit card statement, or mortgage payment, is due. It’s a great way to save money on penalty fees.
3. A budget allows you to plan big purchases. I used to always be in doubt about whether I could afford to sock away some money into my stocks, or if I should save the cash for my next heating bill. With a budget, I no longer have that concern. My budget program instantly tells me what my net worth is for the current month and what bills are left to pay. If everything is covered, I can safely make my next investment (or maybe even save up for that LCD TV!).
4. A budget offers you ways to save. If you download or purchase a halfway decent budget program, you will find that it actually helps you save money by alerting you of credit cards with low interest rates, places to get high interest rate bank accounts, etc. More elaborate programs (some of which are listed below) provide tutorials and inform you of ways you can save on your vacation, mortgage, home furnishings, and even groceries.
So, what budgeting programs are out there? While I wholeheartedly recommend Mint.com’s free budgeting program, there are other fish in the sea (some free, some for a small fee):
Money Tree Personal Budgeting Software. This software creates a straight-forward blueprint of your finances, including all you expenses, incomes, and financial goals. The software comes bundled with some great books, like "Think and Grow Rich" by Napoleon Hill, "Fundamentals of Prosperity" by Roger W. Babson, and "The Art of Money Getting" by P.T. Barnum (of the Barnum and Bailey Circus!).
Budget Living: Tips and Tricks for Saving Money This is an eBook rather than a budget program, but it offers a ton of money-saving tips that make living on a budget possible. By showing you ways to save on common items like groceries, clothing, gas, utilities, and even school, you will find yourself doing more and buying more than you ever thought possible.
If you’d rather purchase a "physical" piece of budgeting software, here are 3 excellent choices:
Quicken Starter Edition (Intuit, Inc. $29.95). Considered the classic of budgeting software programs, Quicken helps you track and pay bills, input your loans, and plan your refinancing. It also integrates into Turbo Tax software. Unfortunately, the software does not track your investments.
AceMoney (MechCAD, $30.00). AceMoney is a very easy to use software program that allows you to look at all your money in one screen (via an account overview function). You can also look at your stock and retirement investments (but not at stock quotes or trades). The program also has the ability to print 9 different reports for your budgeting ease.
Moneydance (Reilly Technologies, LLC. $39.99). Moneydance is a pretty user-friendly software program that can do online banking and bill pay, plus track your investments. There are loads of calculators that come with this software, like mortgage, loan, home refinance, credit card payoff, and miscellaneous debt payoff calculators. One can also use the investment calculator to plan for big purchases. There is a software website community and blog for more information and software updates.
