You’ve finally decided to get out of debt. That’s great news! To help you get out of debt, and stay out of debt, you’ll need to learn how to budget. Budgeting is a financial lesson that cannot be overemphasized. This is one of the most important personal finance skills you’ll learn. Budgeting correctly will help you keep your finances on track, help you save and grow your money.
Here are our 4 reasons why budgeting will help you get out and stay out of debt.
1. Stay on track with repayments
Budgeting forces you to map out your financial goals and keep track of your progress. For example, you may want to get rid of all your debt within the next 3 years. To achieve that goal, you’ll need to know how much you’re paying towards your debt each month. A simple way to ensure that you pay off all your debt on time, automate your repayments.
2. Make better financial decisions
When you get in the habit of budgeting you’ll start making better financial decisions. Do you need the best iPhone? Do you need 20 pairs of shoes? The answer is probably no. We make most buying decisions based on what we want right now. When we should make our buying decisions based on what we need right now, and in the future.
Once you’re in the habit of budgeting your monthly income, you’ll start prioritizing your spending to meet your financial goals. You’ll avoid making impulsive purchasing decisions and focus on achieving your financial goals instead.
3. Rely less on credit
Being in control of your finances puts you in a powerful position. You won’t have to rely on credit cards or family members to help you pay the bills. Budgeting correctly means that you only spend the money you’ve budgeted from your income. Nothing more and nothing less.
If you can’t afford a specific item right now, your budget will help you structure a finance plan for yourself so that you can afford it at a later date. By budgeting for an item in advance, you’re setting yourself an achievable short-term goal.
4. Live below your means
Living below your means is when you spend less money than what you earn. That means you have money left over at the end of the month, even after paying all your creditors. You can achieve this by setting up a budgeting plan.
If you struggle to budget each month due to debt and you struggle to pay for living costs, you may be over-indebted. Debt Rescue has helped thousands of South Africans become debt-free in an affordable manner. Contact us today for a free reduced monthly repayment assessment on your debt.
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