Budgeting
Budgeting is an area of personal finance that I have seen discussed in the media. This area is interesting to me because it helps in proper planning and use of personal finance. A budget is a plan that takes into account the current and future expenses and income. It ensures an individual keeps his spending in check and does not spend money on unnecessary activities. One interesting thing about a budget is that it assists an individual in keeping his eyes on the prize. In most cases, financial resources are usually limited. They may not cater to an individual’s short-term and long-term goals. A budget helps an individual to figure out long-term goals and work towards achieving them. For example, if you want to purchase a car after a given period, then creating a budget will help keep an eye on the prize.
Another interesting thing about budgeting is that it ensures people do not spend money they do not have. It is common for consumers to use credit cards to spend money they do not have. Credit cards make people get into unnecessary debts (Tyson & Martin, 2018). A budget is an important tool if a person does not want to get into such debts. It helps a person to live within their means. Budgeting helps various types of workers to have enough money to save and pay their bills because they will know how to prioritize their income. As a result, they will easily achieve financial freedom because they know to spend on things that matter and ignore those that do not.
The third interesting thing about budgeting is that it assists in emergency planning. Emergencies are uncertainties that may occur in the future. The death of a family member and retrenchment are examples of uncertainties (Tyson & Martin, 2018). Through budgeting, a person will have an emergency fund that will be used when such situations arise.
Review and reflect on the knowledge that you have gained from this course. Based on your review and reflection, discuss the following:
How has your opinion on personal finance changed?
