Personal budgeting is an important factor in regards to successful long term financial stability. Budgeting has many great aspects as well as showing areas of weakness. It can show the truth about your personal financial spending habits, areas that are not looked at enough, and if there are needs for a larger emergency fund. The reality of personal budgeting is that many people potentially do not keep a personal budget for one reason or another. People also don’t consider the negative effect that it could have on one personally and or how it effects the economy.
One major reason that an individual does not keep a personal budget would be the lack of knowledge on how to possess a successful budget of their finances. An individual may not know how to properly construct a budget that will help them become financially savvy. The client could be unaware of how to make a budget balance, how to correctly allocate funds, or even which areas are really the important factors. Excel is a great tool for budgeting if you can utilize the application. But if one does not know how to distribute their funds properly, you could come up short when needing money for bill or to fill your gas tank up to get to work to make an income, which turns into a vicious cycle. This lack of information and know how could deter someone from even thinking about budgeting.
Not only is lack of knowledge a serious factor, a person could make more money than their lives require. This can lead to thoughts of not needing a personal budget because of feelings of security. These false intonations could feasibly lead to disaster later in life. No one knows when an unexpected emergency will occur a person could be making plenty of money to live on and then some. Then at a moment’s notice, that income could be severed due to illnesses or unemployment. With no
