Effects of not keeping a personal budget
A budget is an estimate of income and expenditure for a set period. Financial stability is an important aspect of achieving a healthy lifestyle. Lack of budgeting can lead to major personal and economic problems. Budgeting can also show if there is a need for a larger emergency fund. Very few people are keen on keeping their personal budget (Henry, et al, 2019).
The major cause of not keeping a personal budget is lack of knowledge. Many people lack knowledge on the most proficient method to have a successful budget of their accounts. It becomes very hard to come up with budget that will make a person become financially smart. One is required to do some tasks such as budget balance and allocation of funds. However most people in our current society lack this skill and hence cannot keep a personal budget (John, 2010)
Other than lack of knowledge on budgeting, the other cause of not keeping a personal budget is poor planning. Inability to develop realistic forecast may lead to non -transparent adjustments during budget execution. This comes about especially when one does not have a clear vision of what is expected. Also when one does not plan on a specific timeline ends up not keeping personal budget. Poor planning makes one end up being extravagant and irresponsible and thus they end up not keeping a personal budget (Frank, et al, 2018)
The other reason as to why people do not keep a personal budget the thought that they do not need it. This happens mostly to people who earn huge amounts of money. Often, they think it is money is enough for all their needs whether planned or unplanned. They have a sense of security from their salary or earning and therefore they lack the need of keeping a personal budget (Aman, et al, 2012).
However there are consequences of not keeping a personal budget both to the economy and to the people. The economy at large is affected negatively when people do not keep a personal budget. When people do not keep a personal budget they find it hard to navigate unexpected expenses. For example a situation that needs a lot of finances may come abruptly and it needs immediate attention. One may find this hard to manage because they may have not put money aside for emergency needs. It causes one to miss payment of other bills or even go into debt. With a budget one is able to handle financial repercussion (Aman, et al, 2012)
It becomes very difficult to achieve financial goals when one does not keep a personal budget. For one to achieve financial goals, you need to create a plan of attack. Beyond that you need to keep a track of your progress so that you can correct it in case of any drifts. This helps the growth of the economy since money is used in the right way. All this is achieved by keeping a personal budget. (Bartley et al, 2018).
Lack of saving is a serious consequence of not keeping a personal budget. Many people do not know their exact income and their monthly expenses. Monthly savings depends on monthly income and expenses. A person can have savings by keeping a strict budget to spend on the most important things. It is advisable to develop a specific amount to save every moth then to spend the remaining amount appropriately (Bartley, et al, 2018)
Budgeting creates boundaries within your financial life. It becomes very easy to overspend since there no money limit. It is easier to blow up all the money and end up being broke or with debts. Budgeting properly makes it easy to know how much money you can spend realistically spend on your expenses, while still staying on track to meet your financial goals (Bartley, et al, 2018).
One can keep a personal budget by monitoring their needs, categorizing expenses on a specific date, add your salary and any income you have and finally put all your costs and local currency among many others.