This is a guest post from Jake Higgins, a spreadsheet whiz who helps people overcome their fear of Excel and create a budget.

Some of us have one. Some of us know we should have one but haven’t taken that step. Some of us had one but haven’t touched it in years. And some of us cringe just at the word…budget. budget2

But the reality is that a budget is essential! This post is to stress the importance of a budget and recommend a resource that will help you create and maintain your own personal budget in about an hour. Why is a budget so important? Well, in my opinion, a budget is important for 3 main reasons:

Reason #1: Money escapes you without a budget. When you aren’t tracking your money on a monthly basis, you never realize how much you are spending. There are always little things that get away from you-$4 at Starbucks, $11 on a shirt, $6 for lunch, $9/month for a gym membership you have but don’t use. If you aren’t holding yourself accountable for these little expenses, then you’ll find yourself spending more money than you make.

Reason #2: A balanced budget gives you room to make a plan. Even if you make more money than you spend, you will not be able to put that left over money to good use without a budget. Are you saving it? Investing? Vacationing? What can you cut down on? What can you afford to increase spending on? Properly putting your money towards where you want it to go is almost as important as not overspending. A budget gives you not only a snapshot of daily expenses, but also helps you keep the big picture in mind.

Reason #3: Tracking your expenses hurts. When you physically keep track of what you’re spending, it exposes where you may be overspending. Actually entering the numbers yourself makes you say “oh man-did I really spend that much on food?” or “maybe I see an opportunity to cut down there”. Sites like mint.com or other budgeting tools are almost too easy to use, you’ll automate everything and before you know it, will stop checking it.

Now-how do you go about creating and maintaining a budget? Tools like Excel or Google docs are tricky, especially if you have little to no experience with spreadhseets.  Go budgets!   – Jake

Enjoy some other articles about budgeting:
Where does my money go?
Budgets in college
Cardinal Rules of Personal Finance

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