The Importance Of Budgeting

Vincent Pucillo

11.03.2020

Being in control of your finances is crucial to having financial freedom. Some of the simple ways that we can do this is to avoid taking on unnecessary debt and spending money on things we cannot afford. However, the foundation of this is having a budget.

A budget allows you to keep track of every dollar that you spend and every dollar that you make. There are lots of tools and apps you can use (such as Mint or EveryDollar) to help you create and stick to a budget and track all your spending to ensure you do not overspend. While there are several types of budgeting techniques, the budgeting technique I use is called the zero-based budget.

This involves writing down how much you make in a month (monthly income) and your expenses (rent, groceries, gas, books, utilities, miscellaneous costs, money being saved/invested, etc.) Your goal is to make sure that your expenses subtracted by your income equals zero. This ensures every dollar you make and spend is accounted for.

More information:
Zero-balanced budget: https://www.daveramsey.com/budgeting/how-to-budget
4 budgeting methods: https://corporatefinanceinstitute.com/resources/knowledge/accounting/types-of-budgets-budgeting-methods/