Benefits of Budgeting & How it Can Reduce Your Debts
Budgeting is the key to a sound and secure financial future. It is an easy process and it will allow you to quickly see how much money you earn and how and on what you spend your money. Once you learn how to budget and you are disciplined then you will easily be able to take control of your money.
Pinpoints your exact income and expenditure
Budgeting is easy process. Write down how much you earn then write down how much you spend and on what items. For example if you take home $850 per week then that is your starting point. You will then need to list your major expenses such as rent or house mortgage; food expenses; car expenses; medical; clothing cost etc. This will demonstrate how much disposable income you have at your current level of income and where it is possible for you to make savings.
You can also see how much extra money can go on debt servicing instead of being spent on miscellaneous goods each week. This is why budgeting has to be done honestly for it to be effective. It also has to be comprehensive. Don't forget trips to the hairdresser, car wash, trips to the coffee shop and all the other small things that are often overlooked. If you're assessment is thorough you can have complete control of every aspect of your finances. Review your personal situation and budget every couple of months to ensure you stay on track and remember that if you have scheduled to cancel an extra expense (such as an unused gym membership) don't forget to do so.
Budgeting systemises your spending
Once you draw up your budget all you have to do is stick to it for it to work. You will be on your way to reducing or even eliminating wasteful spending. As an additional benefit your disposable income will increase. This means you have more money to spend, to pay off your debt more quickly or to build savings. Using this rationale budgeting actually gives you more money to spend as you begin to spend your money more wisely. Before you get to the point of having more money available, it is often useful to use your extra money to eliminate your debt.
Impulse borrowing is reduced
As spending is not monitored without a budget, it is easy to spend money frivolously and even to borrow money by using a credit card for spending. With budgeting you have more disposable income so you can buy the items you would previously have used borrowed money to purchase. This will help reduce overall credit card liabilities. When impulse borrowing is reduced your spending overall is reduced too.
Save money on fees and interest
As you begin to reduce your impulse borrowing, control your spending generally and discover money you can use to pay off debts you will also save money on fees and on interest on your debts. People often forget that they make money by saving money that they would ordinarily have been spent on fees.
Controlling your spending is worthwhile and easier to do if you budget.
Fox Symes is the largest provider of debt solutions to individuals and businesses in Australia. Fox Symes helps over 100,000 Australians each year resolve their debt and take financial control.
If you are in debt and want to know more about the solutions available to you contact us on 1300 098 127.