Budgeting is a wonderful tool for managing your finances, but many people think it's not for them. Below is a list of budget myths—the erroneous logic that stops people from keeping track of their finances and allocating money in the best way. Having a handle on your monthly income and expenses allows you to make sure your hard-earned money is being put to its highest and best purpose.
For those who enjoy an income that covers all bills with money left over, a budget can help maximize savings and investments. If one's monthly expenses typically consume the lion's share of net income , any budget should focus on identifying and classifying all the expenses that occur during the month, quarter, and year.
And for people whose cash flow is tight, it can be crucial for identifying expenses that could be reduced or cut, and minimizing any wasteful interest being paid on credit cards or other debt. Thanks to budgeting software , you don't have to be good at math; you simply have to be able to follow instructions. Many of these programs are free and legitimate. If you know how to use spreadsheet software, you can make your own ledger. It's as simple as creating one column for your income, another column for your expenses, and then keeping a running tab on the difference between the two.
No one's job is truly safe. If you work for a corporation, being laid off due to downsizing or a takeover always is a possibility. If you work for a small company, it could die with its owner, be bought out, or just fold. You should always be prepared for a job loss by having at least three months' worth of living expenses in the bank. It's easier to accumulate this financial cushion if you know the amount you're bringing in and spending each month, which can be monitored with a budget.
Unemployment compensation is not a sure thing. Let's say a bad situation at work leaves you with no choice but to quit your job. Unless you can prove constructive discharge that is, you were virtually forced to resign , your departure will be considered voluntary, making you ineligible for unemployment insurance. Budgeting is not synonymous with spending as little money as possible or making yourself feel guilty about every purchase. Unless you're on a very tight budget, you should be able to buy baseball tickets and go out to eat.
Tracking your expenses does not change the amount of money you have available to spend every month; it just tells you where that money is going. If you don't have any major savings goals buying a house, starting your own business , it's hard to drum up the motivation to stash away extra cash each month.
However, your situation and your attitudes likely will change over time. Perhaps you don't want to save up for a house because you live in New York City and expect that renting will be the most affordable option for the rest of your life.
But in five years, you might be sick of the Big Apple and decide to move to rural Vermont. Suddenly, buying a home becomes more affordable and you might wish you had five years' worth of savings in the bank for a down payment. Yes, the catch of student financial aid is that the more money you have, the less aid you'll be eligible for.
That's enough to make anyone wonder if it isn't better to just spend it all and have no savings in order to qualify for the maximum amount of grants and loans. But that catch mainly applies to earn income. Whether you are an adult student going back to school or the parent of a student headed to college, the Free Application for Federal Student Aid FAFSA form used for Stafford Loans , Perkins Loans , or Pell Grants , does not require you to report the value of your primary residence if you own a home or the value of your retirement accounts.
So if you want to save money without compromising your financial aid eligibility, you can do so by using your savings to buy a house, prepay your mortgage , or contribute more money to your retirement accounts. The savings you put into these assets can still be accessed if you face an emergency, but you won't be penalized for it. Even if you employ all the available legal strategies to maximize your financial aid eligibility, you still won't always qualify for as much aid as you need, so it's not a bad idea to have your own source of funds to make up for any shortfall.
Good for you! But being debt-free without any savings won't pay your bills in an emergency. A zero balance can quickly become a negative balance if you don't have a safety net. It's never a good idea to count on unpredictable sources of income.
This may be the year your company may not have enough money to give you a raise or as much of a raise as you'd hoped for. The same is true of bonus money. Tax refunds are more reliable, but this depends in part on how good you are at calculating your own tax liability. Some people know how to figure how much they'll get in a refund or how much they will owe as well as how to adjust this figure through changes in payroll withholding throughout the year.
However, changes in tax deductions , IRS regulations, or other life events can mean a nasty surprise on your tax return. If you're still not convinced that budgeting is for you, here's a way to protect yourself from your own spending habits. Set up an automatic transfer from your checking account to a savings account you won't see i.
If you are saving for retirement, you may have the option of contributing a set amount regularly to a k or other retirement savings plan. This way, you can pay yourself first, have enough money for the transfer, and pay yourself the same predetermined amount that you know will help you meet your savings goals. In general, traditional budgeting starts with tracking expenses, eliminating debt, and once the budget is balanced, building an emergency fund. But to speed up the process, you could start by building a partial emergency fund.
This emergency fund acts as a buffer as the rest of the budget is put in place and should replace the use of credit cards for emergency situations. The key is to build the fund at regular intervals, consistently devoting a certain percentage of each paycheck toward it, and if possible, putting in whatever you can spare on top.
This will get you to think about your spending, too. You should only use the emergency money for true emergencies: like when you drive to work but your muffler stays at home, your water heater dies, or a leak springs in your roof. You would save money if you used your emergency fund to eliminate credit card debt , but the purpose of the fund is to prevent you from having to use your credit card for paying for unexpected expenses.
With a proper emergency fund, you will not need your credit card to keep you afloat when something goes wrong. Now that you have a buffer between you and high-interest debt, it is time to start the process of downsizing. The more space you can create between your expenses and your income, the more income you will have to pay down debt and invest. This can be a process of substitution as much as elimination. For example, if you have a monthly gym membership, cancel it.
Use half of the money you save to invest or pay off outstanding debts, and save the other half to begin building a home gym in your basement. Instead of buying coffee from a fancy coffee shop every day, invest in a coffee maker with a grinder and make your own, saving more money over the long term.
Although eliminating expenses entirely is the fastest way to a solid budget, substitution tends to have more lasting effects. People often cut too deep and end up making a budget that they can't keep because it feels like they are giving up everything. Substitution, in contrast, keeps the basics while cutting down the costs. Why isn't this the first step? If you simply increase your income without a budget to handle the extra cash properly, the gains tend to slip through the cracks and vanish.
Once you have your budget in place and have more money coming in than going out along with the buffer of an emergency fund , you can start investing to create more income. It is better to have no debt before you begin investing. If you are young, however, the rewards of investing in higher-risk, high-return vehicles like stocks can outweigh most low-interest debt over time.
Now you understand the finer points of budgeting. You've accomplished all of the above, even put together a nice spreadsheet that lays out your budget for the next 15 years. The only problem is that sticking to that budget isn't as easy you thought.
That credit card still calls your name, and your "clothes" category seems awfully small and you feel deprived. There will also be a list of synonyms for your answer. The synonyms have been arranged depending on the number of charachters so that they're easy to find. If a particular answer is generating a lot of interest on the site today, it may be highlighted in orange. If your word has any anagrams, they'll be listed too along with a definition for the word if we have one.
Missing Link Privacy. We'd just like to take a moment to apologise for the continued delays the site is currently experiencing. Subscribe to America's largest dictionary and get thousands more definitions and advanced search—ad free! Log in Sign Up. Thesaurus budget noun. Save Word. Synonyms of budget Entry 1 of 3. Words Related to budget.
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Time Traveler for budget The first known use of budget was in the 15th century See more words from the same century.
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