Budgeting is the process of creating a plan to spend your money. This spending plan is called a budget. Creating this spending plan allows you to determine in advance whether you will have enough money to do the things you need to do or would like to do. Budgeting is simply balancing your expenses with your income. If they don’t balance and you spend more than you make, you will have a problem. Many people don’t realize that they spend more than they earn and slowly sink deeper into debt every year. If you don’t have enough money to do everything you would like to do, then you can use this planning process to prioritize your spending and focus your money on the things that are most important to you.
Why is Budgeting so Important? Since budgeting allows you to create a spending plan for your money, it ensures that you will always have enough money for the things you need and the things that are important to you. Following a budget or spending plan will also keep you out of debt or help you work your way out of debt if you are currently in debt.
What about Budget Forecasting and Planning? Once you have created your first budget, begin to use it and get a good feel for how it can keep your finances on track. You may want to map out your spending plan or budget for the next 6 months to a year. By doing this you may be able to forecast which months your finances may be tight and which one you may have extra money. You can then look for ways to even out the highs and lows in your finances so that things can be more manageable.
Extending your budget out to the future allows you to forecast how much money you will be able to save for important things, like a house, home renovations, a car, family vacation, saving for emergency rainy day fund or retirement. Using a realistic budget to forecast your spending for the year can really help you with your long-term financial planning. You can then make realistic decisions about your annual income, expenses and plan for long-term financial goals. — Motivational and direct tone and informal writing style
