Why is budgeting important?
You will never know how you are doing without measuring it in a factual manner. Likewise, you cannot improve if you don’t know what you need to improve upon.
Numbers don’t lie, and your budget will be the best reflection of how well you control your spending.
The first question I ask people who tell me they have difficulty saving money is, “how much are you spending each month on _____?” If they can’t give me a definitive number, then therein lies their problem. I liken it to people who say they can’t lose weight. If they don’t know how many calories they are taking in and how many calories they are burning per day, then how do they expect to have any grasp on the things they can improve on in order to see results?
A budget is necessary in order to track progress. People will usually try to ball park their spending, but it never works. Why? Because we always underestimate how much we spend. It’s human nature. We want to appear better than we are, so we subconsciously choose to cheat, and tell ourselves that we did better with the spending last month than we actually did.
It’s difficult to understand what’s keeping us from financial freedom if we do not know where our money is going. Budgeting will teach you a lot about what you spend money on, what you prioritize, and what you value.
It will show you what you want in life.