Why Should I Budget?
Budgeting can seem daunting at first but once you realize the benefits you will appreciate it significantly. If you are reading this and wondering if you need a budget ask yourself the following questions. Do I know where all of my money is going in a given month? Am I progressing towards my financial goals? Am I stressed or uneasy about my finances? If you don’t know the answer to any of these questions, then budgeting is for you! There are many different ways budgeting can benefit you, some of which you might not have thought of. This blog post will cover three ways basic budgeting can help.
How to Budget:
Before learning the benefits you need to learn how to budget. There are three basic steps:
- Start by using Powercat Financial’s spending plan worksheet. The first column on the left is the estimates column; this is where you put in how much you think you are spending just off the top of your head. Start at the top of the sheet and work down each row filling in values as is applicable.
- After you have completed the estimates column, it is time to start working on the actuals column. Here you will need your bank and credit card statements or receipts to fill in the actual amount you are spending for each line item in the budget. This might be a reality check if this is the first time you have done this.
- Finally, create a spending plan for the next month. Using the data you have collected in your actuals column you can set spending limits and forecast expenses for the next month in the next month column. Voila, you now have a budget or spending plan created for the next month. All you have to do now is stick to it!
- If you find that you are coming up short at the end of the month (negative balance at the bottom), then you can use the need or want columns. These columns are helpful for determining where you can potentially cut back on spending. A need is something you absolutely require for survival. On the other hand, a want is a non-essential item in your budget.
Bountiful Benefits!
Now on to the benefits of budgeting. First, budgeting helps you identify “spending leaks”. A spending leak is an area in your budget where you are spending more than you realize. For example, you might think you are only spending $15 a month on coffee. However after you create a budget, you then realize that you are actually spending closer to $50 a month on coffee. Now that you are in the know, you can set your spending where you would like it to be.
Second, budgeting allows you to plan a path to your financial goals. What is a financial goal? It is a money target that, when hit, will bring you closer to the lifestyle or experience you are working toward. For example, your financial goal might be to buy a house within the next five years. Another might be, paying off your student loans early. Budgeting will allow you to allocate funds to specifically work towards whatever financial goal you have set. Creating and keeping a budget will also help you track your progress to said goals.
Last but not least, budgeting can help reduce stress related to personal finances. By budgeting you remove scenarios where you are at the store wondering if you can afford something. Using the spending plan mentioned above, you can dictate specifically where you want each dollar to go. This will help you decide what you can and cannot afford. In addition, it might also help you find money you didn’t know you had. Budgeting removes the guess work to personal finance and helps you understand the exact impact of each purchase on your financial wellbeing.
Need Help?
Powercat Financial is here to help when it comes to creating personal budgets. We would love to meet with you to talk about the details of budgeting as well as walk you through the entire process. Appointments are free and confidential for all K-State students. You can schedule an appointment on our website here: Powercat Financial. You can also find the spending plan worksheet on our budgeting page here: Powercat Financial Budgeting. In addition to budgeting Powercat Financial can help with anything from understanding student loans to evaluating job offers.
Upcoming Event: Powercat Financial will host an interactive game of life simulation along with Meritrust Credit Union on April 6th from 12:00-1:30pm in the Union Courtyard. Come experience a “real-world” game of Life based on day-to-day financial decisions and learn how to manage your money!
Abram Mugler
Peer Counselor I
Powercat Financial
302 K-State Student Union, Third Floor
918 N. 17th Street
Manhattan, KS 66506-2800
785.532.2889
www.k-state.edu/powercatfinancial
PowercatFinancial@k-state.edu
