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The Benefits of a Budget
When you are struggling with debt it can become overwhelming very quickly. There are plenty of options out there to give you some debt relief, including filing for bankruptcy or a consumer proposal. However these are somewhat drastic measures that can harm your credit rating, so it is always best to consider other options first.
Many people are unaware that a simple budget could help them get their finances under control and make the payments that they are currently juggling. If you are already far behind or receiving calls from a collection agency then you may need to seek professional help from a Trustee in Bankruptcy but a budget can be useful even then.
So what is a budget?
A budget is a summary of all of your likely expenses for a given period. You make a plan for how much you intend to spend in each category and then track your expenditures to see if you are achieving your goals. You include all your bills and savings in your budget, and then see how much money you have to play with each month for things like entertainment and clothing.
How can it help?
The key to financial management is being aware of your spending habits. Creating a budget and then tracking where your money goes can help you identify wasteful expenditures and alter your lifestyle to save more money. If you know exactly how much money you will have each month after your bills are paid you can make spending choices that won’t put you in the red.
A budget can help you decide whether you can order a pizza or defrost some of last weeks lasagna. More long-term it can help you pay off debts or achieve financial goals, like saving for holiday.
Creating a budget can also help decrease you financial stress levels, because if you are doing it right, there shouldn't be any surprises. You know how much you have and how much you spent so you won’t have to play debit roulette at the grocery store.
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