Planning Your Budget & The Benefits Of Forward Thinking

So you’re budgeting already? Good for you –- there is a lot to be said for having a budget, even if you stray from it every now and then.

It is a particularly useful thing to have when it comes to advance planning for certain occasions in your life. As you are about to find out, advance planning and budgeting fit together very nicely indeed.

Planning Your Budget & The Benefits Of Forward Thinking

Let’s say you want to go on vacation at some point. If you are on a budget and you decide this week that you want to go on vacation in a month’s time, then you will very likely fly into an immediate panic.

You’ve got two broad choices in this situation –- you’ve either got to ditch that budget and enjoy the vacation, or postpone your trip so you have longer to plan and save for it.

The first method might be tempting when you see a great travel deal on offer for somewhere hot and sunny. But you will be returning to problems when your budget is shot to pieces and you have bills to pay.

On the other hand, giving yourself more time to plan for that vacation means you can fit it into your existing budget. For instance, your budget may allow for a sum to be set aside in your high yield savings account every month. You might decide to allocate that sum to your vacation fund for the next few months. Alternatively, you might feel better foregoing your monthly magazine subscription and a couple of other treats you normally have, and save up that money instead.

You get the point, I’m sure. Advance planning makes your budget more flexible and user friendly. Making a last minute decision to buy something expensive doesn’t give you or your budget any wiggle room at all.

There are a lot of benefits to using budget planning software. Check out You Need A Budget (YNAB) if you’re looking for a good desktop budget application. Our YNAB review can give you more details.

Remember: No Budget Is Set In Stone

Some people have a belief that once they commit their budget to paper, they’re stuck with it. Not true! In fact, if you have never budgeted before, there is a good chance that you will have to amend it at some point anyway. It is rarely the best it can be right off the bat.

The point is that the further in advance you can plan for something, such as vacations, Christmas, birthdays and so on, the easier it will be for you to make adjustments and to fit that expense, event or occasion into your budget.

Let’s say you want to spend a hundred dollars on your partner for their birthday. Your budget has $20 to spare each month once you’ve accounted for all your outgo. It stands to reason that if you want to free up one hundred dollars by the month before your partner’s birthday, then you’re going to struggle to do it. You’ll have to make sacrifices and move things around a bit in your budget to make it happen.

But with advance planning, you know you’ve only got to tuck those twenty dollars away each month for five months in a row to get the amount you need. In this example, you don’t have to do anything at all to amend your budget. No headaches, no figuring out how to make it work and no problems either.

Isn’t it much easier to plan ahead and to act earlier in order to accomplish a goal?

2 thoughts on “Planning Your Budget & The Benefits Of Forward Thinking”

  1. Pingback: Ten for Thursday, November 18, 2010 | AllFinancialMatters

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