Why budgeting is important?

1.) I used a budget to get myself out of debt. 2.) It was pretty easy. I estimated what my expenses for various things are every month. Most of my budget remains the same month to month, but things like clothes, food, entertainment are the easiest places to lose track of spending. I established a cash fund for those things and used that as a basis for what I can and can't afford. It made me cut back on eating out and more selective when I made purchases. 3.) After I got out of debt, I was able to start a savings account. Today I don't need to use credit for large purchases. If it was a really large purchase, getting out of debt has increased my credit score to the point where I qualify for the best interest rates, so I would just go to my bank for a loan if I needed one. 4.) We realized that we were not budgeting enough money for groceries each month, so we simply increased the budget incrementally each month until we started having funds left in the grocery budget each month. 5.) We continue to keep our budget because it keeps our spending in check and prevents us from falling back into debt.

Budgeting is very important for the following reasons:-

*   To analyse the total money you have in hand at present and divide it for various matters of the business such as entertainment,  utilities, salaries, etc.....

*   To forecast the expense for the coming period and make sufficient margin for profit.

*   To know the limit you can spend for a particular period. For eg:  quarterly, half-yearly or yearly.

*   To know if you are within a particular limit of spending money on various expenses for a particular period, in order to ensure that you don't cross the spending limit unnecessarily.