Budgeting: You Don’t Need To Be An Accountant To See The Value in It
Turns out 4 out of 5 people in the U.S. use budgeting as a way to control and track their expenses, however 20% of them only keep a mental budget. For those, there’s no spreadsheet in place, no details for accuracy; just an overall idea of where money is going. Impulse buying use to mean a pack of gum at the checkout line, but today you can purchase electronics, appliances and so much more with just a few clicks on your laptop. That takes impulse buying to a whole other level, making budgeting even more critical to your financial future. You don’t have to be a professional accountant to see the value in having a detailed budget plan, and not just a mental one.
Budgeting By Numbers
According to a Gallop poll, in 2013, only 38% of college educated adults practice budgeting. That number drops to 26% for those with a high school education or less. According to CreditDonkey’s survey, which attracts people interested in personal finance, 70% of people who budget check their spending against it at least once a week. [hr]
That same survey found that 29.2% of people weren’t saving any of their income, while the 10.8% of respondents that were saving were setting aside over 20%.
Why Budget, According to a Professional Accountant?
Even though most people hate the word ‘budgeting,’ there’s really nothing bad about it. All it means is that you have a plan for your money. To spend with purpose, to know where your funds are going and make sure you don’t overdo it. With a budget, you’re able to plan for the next month as well as for a rainy day. It doesn’t have to limit you in any way.
Where to Start With Your Budget
If you’re not budgeting currently, this professional accountant says start with a zero-based budget. That means that before the next month begins, you should account for every dollar. So your income minus all your expenses equal zero. If you’re with a partner, you should budget together so you’re both aware of your personal finances but also all expenses, for the entire household.
Paying off debt is part of your budget as well as a savings plan. You should put money aside every month, no matter how small the amount or how tight your budget is. Make sure that category as a necessity. You may find that you have to let go of a few purchases you’ve gotten used to in order to fulfill your savings plan.
That may mean that you have to cancel cable and perhaps go with a cheaper alternative like streaming movies online or perhaps forgo your daily morning latte. Adjustments are necessary.
Budgeting is really not that complicated, just write it all down for a big picture of your monthly expenses. It’s a great way to save money and get the things you really want in life.