Budgeting

Budgeting Should Reduce Stress, Not Increase It

Some people avoid making a budget because they think it is a benchmark that is just too rigid. They assume they can never stick to a budget, so why bother creating one in the first place?

The real purpose of a budget is simply to find out where your money is going so you can gently direct it to where you really want to spend your money. Your budget should make your life less stressful, not more and if your budget is stressing you out, take a deep breath and continue reading.

How to make a budget?

The classic advice for those just starting to gain control of their finances is to simply write down all your purchases for a set period of time, usually 4-6 weeks. By doing this, you can find out what you are spending your money on and where you can make changes. Some people are shocked to find out they spend more than $50 a week buying their lunch at work! Once you know where your money is actually going, you can change your spending habits and this will redirect the flow of your money to areas where you want it to go.

For example, if you’ve been postponing trying a new hobby because you think you can’t afford it, try making your lunch in advance and taking it to work with you. If you can save at least $20 a week, you’ve found $80 a month to put toward your new hobby.

Once you know where you money is going, you can make up a new budget, trimming here and there, but perhaps increasing in other areas. You should absolutely set aside some dollars in your budget for a special hobby or relaxation time with your family. Budgets are not about punishing you for past behaviour, they are all about gaining control of your money so you can begin to chart your own financial course.

Of course, life always throws us unexpected moments. If you are currently in one of those times and need to take out a personal loan, don’t beat yourself up. You are now more aware of your finances and soon you’ll be back on track to meet all your goals!