Budgeting Technique to Build a Stable Financial Future
There’s nothing like the feeling of independence of when you’re in college, but since it’s the first time away from home for many, This is the time when most young people use their first debit/credit cards, take out their first loans, and write their first checks. However, this is also the time where bad budgeting habits and mistakes that can leave long-lasting effects on their financial standing. With all of the budgeting techniques mentioned earlier it can still be hard to navigate your finances. Budgeting is the key to a healthy and stable financial future. However, just setting a budget doesn’t mean you’re automatically going to find success. It takes dedication, sacrifice and patience.
With so many different options and techniques such as incremental budgeting, activity-based budgeting, zero-based budgeting, envelope budgeting, and using budgeting apps, etc. It is important to diversify your budgeting techniques. Finance author Emma Johnson believes “Setting a budget that looks the same every single month is a big-budget mistake since expenses differ depending on holidays, birthdays, vacation time, energy costs during warmer or cooler months, taxes or home or car repairs. To avoid breaking your budget, plan each month out one at a time at the start of the month” (Johnson, 2016). This is especially true for college students who usually have irregular expenses and varying income. A budget is based on a set of assumptions. If expenses and income change to any significant degree so would the type of budget. Budgets won’t last if you don’t prepare properly.
Another common budgeting mistake is not allowing enough wiggle room. Having a budget that is too restricting is a huge problem. It is possible that you can lose motivation and quit way to early in the process. Long periods of restriction can be both demotivating and tiring. In an article written in The Secured Lender, Jack Panitch wrote “What the budget allocates isn’t always what’s needed. Opportunities will occur as well as setbacks, the objective is to retain budget criteria”(Panitch,1989). Building a budget that allocates zero room for fun, indulgences, or random spending makes even the tiniest discretionary a budget killer, making it pointless. Some people can benefit from using a simple budgeting plan. A simple spending plan is an easy way to budget that helps you save money, get out of debt, pay your bills on time, and still allows you the freedom to spend money on things you value.
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