Each individual has his own motivation for creating a personal budget. The budget acts as a guide to lead you toward some financial destination down the line. Let your own personal mission, goal or objective for planning a budget motivate you to take the reins of your finances, starting today.
Save or Invest Money
The desire to invest or save money is one goal that drives individuals to create personal budgets. Personal reasons for wanting to save vary; you might want to make a large major purchase in the near future or invest money in a retirement account. It's smart to establish an emergency fund to cover bills for a few months in case of a financial hardship. Financial writer Elizabeth Warren suggests that you set aside a target savings rate of at least 20 percent of your take-home income.
Pay Off Debt
Paying off debt by a certain point in time is another motivating goal for someone planning a budget. This commonly applies to unsecured debts, like credit cards and credit lines, but you may also have a desire to be completely debt free — no mortgage, car payment or any obligation. Money management author Steve Bucci lists 50 benefits of being debt-free, including "having enough money for both needs and many wants" and "having the control that accompanies buying things with cash."
Prepare for a Life Change
Preparing for an impending life change provides motivation for careful budgeting. This includes having a baby, getting married or transitioning from a rental to your own property. It's helpful to have a budget to properly manage your money leading up to these events, so that the costs don't overwhelm your finances. As an example, consider the financial shock of having a baby. The U.S. Department of Agriculture estimates that the first-year costs of having a baby ranges from $9,000 to $11,000. You can end up spending a quarter of a million dollars to raise a child from birth until he reaches the age of 17.
Peace gf Mind
Peace of mind is an overriding goal for many people when it comes to creating a budget. When you just wing it with your finances, you are taking serious risks. For instance, you won't know if you'll have enough money left over at the end of the month to pay all your bills, which could put you into a cycle of debt or living paycheck to paycheck. Having a budget that allows you to save and pay your bills on time helps you sleep better and worry less, knowing that you have a plan. For example, a study by Stephen Brobeck of the Consumer Federation of America found that people who didn't have at least $500 saved were worried, stressed and had trouble sleeping.