› Budget101 Discussion List Archives › Budget101 Discussion List › Why live on a budget?
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January 2, 2008 at 2:00 pm #254956
Melissa Burnell
Why live on a budget?
By Shelly K. Schwartz
1. Help control debt
2. Earn cheaper rates
4. Save more money
If you’re like most Americans, your monthly income never goes far
there’s little leftover for things that matter most to you — weekly
dinners out, orchestra-row theater seats, a college savings plan for
Hate to break it to you, but it’s not your salary that’s to blame.
According to financial experts, it’s a pattern of poor spending
“When my clients sit down and really look at where their money is
going, oftentimes they are shocked to find it has nothing to do with
financial planner for Compass Wealth Management in Maplewood,
N.J. “Five dollars a day on Starbucks, for example, is a big number
been struggling to attain.”
Life’s little extras are well within reach for those who know how to
By establishing reasonable spending limits and sticking to them, the
average consumer can do far more with less — without sacrificing
Foundation, a self-help consumer education Web site.
“Budgeting is all about controlling your finances instead of letting
going to save you money in the long run.”
Controlling debt
overspending, which results in lower savings and higher credit card
debt.
American carries $2,328 in credit card debt, spread out across 2.9
cards. With interest rates at or above 18 percent for most cards,
with 18 percent interest would cost you more than $8,000 to pay off
if you made only the minimum payments (4 percent).
credit card interest could be extra money you could apply towards
something else,” Siesta says, adding that following a monthly budget
to begin with.
Cheaper rates
organized. That, in turn, helps you avoid late payment penalties and
improves your credit score. Lenders use your credit score to
loans. It also can affect how much you pay for auto and homeowners
insurance.
A less obvious benefit of budgeting is the positive effect it can
have on relationships. According to Siesta, sitting down with your
disputes down the road. It also provides a rare opportunity to define
your own spending philosophies. “Money is a huge source of stress for
with a spouse or significant other really does help create better
understanding and better relationships.”
Finally, learning to live within your means can help you get ahead.
By allocating a portion of your monthly budget towards savings, you
financial safety net for short-term emergencies, in case you or your
spouse lose a job or suddenly fall ill.
withstand the financial surprises that life throws your way,” Tehan
said.
and spending, you’ll never make the most of your income — no matter
how much money you earn.
“They don’t lead you away from something. They lead you toward your
financial goals.”
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› Budget101 Discussion List Archives › Budget101 Discussion List › Why live on a budget?