Having a planned personal budget and following it daily will surely help you meet your financial needs. Personal budget is a tool that helps you have control over your money. It gives an idea of how much you can afford for your various needs. It will enable you to determine whether a certain purchase will fit within your monetary constraints or not.
Whereas, not having a personal budget disturbs your personal financial situation. Your money goes haywire, and you will be left with no money in times of emergencies. The below article helps you understand how not having a personal budget affects your personal finances. Here are some possibilities that may occur if you have no proper personal budget in place.
You spend more than you earn
Budgeting helps you plan and track your expenses. Without having a proper budget, you tend to spend more than what you earn. There are people, who irrespective of their income levels, spend every penny they earn. Spending culture is getting worse day-by-day with the changes in lifestyles and unabated consumerism. This kind of behaviour can lead you to troubles, as it leaves you with nothing at the end of the month.
You start borrowing money
As you get into the habit of living pay cheque to pay cheque, you will be left with no money to save. Hence, you start borrowing money either to maintain your expensive lifestyle or to attend your unexpected needs. It is not only the lack of financial discipline that makes you get into debt-trap but also some sudden emergencies for which you may have not prepared. Also, there are some people who are struggling to pay off their current debts and still borrow debt to maintain an expensive lifestyle.
Most of your income goes into repaying debt
Debt, if not controlled, spreads like a virus. You will take more debts to clear current debts. This way, most of your income is used to repay your debts and you will struggle to manage your finances. Using credit cards is not a bad idea. But doing so without a budget and plan on repaying the debt will lead you again into financial hardships. Further, debt issues can also impact your mental health and family relationships.
The end result – you have nothing left
Impulsive spending behaviour, uncontrolled desires and no proper personal budget are the main reasons for getting you into financial troubles. These habits leave you with no money at the end of your life. If you live pay cheque to pay cheque, you cannot save money for short-term or long-term goals.
Hence, have a proper monthly personal budget. Prioritize your spendings. Allot money for all necessary expenses and set aside some money as savings. Cut costs on unnecessary expenses like eating out, drinking and smoking, night parties, vacations/tours, etc.
Personal budget helps you stay disciplined and organized about your finances. It helps you improve your overall living condition, by allowing you to understand and change your spending behaviour. Also, it helps you to plan and solve your monetary issues.