Keeping track of your finances is always a good idea and if you take the step of creating a personal budget that allows you to see where you are and control your spending, it can definitely have a positive impact on your life in general.
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Facing up to your finances
Taking an honest look at your income and expenditure can be a real revelation and may even end up paving the way for a better financial future, once you have reevaluated your relationship with money.
One of the best ways of assessing your true current financial position is to create a budget.
When you create a budget, the process of putting all of the figures down on paper or onto a spreadsheet, will allow you to see exactly how you are spending your money each month and where changes or cutbacks might need to be made.
One of the main things that many people notice when they take the time to put a personal budget together, is that just how much money seems to leak from your bank account and pockets, without you really noticing it.
A budget where all of your finances are there for you to see, will allow you to see exactly where some emergency financial plumbing might be need to plug the leaks. It is often a surprise to see just how much those regular coffees on the way to work add up to each month, or to find that a monthly payment is still going out for a gym membership that you no longer use.
Peace of mind
Arguments over money are one of the most common causes of tension and difficulties within a relationship and worrying over money is a major cause of stress.
Making the effort to create an honest appraisal of your financial situation and creating a budget that you can realistically stick to, will often help to reduce your own levels of stress and reduce the prospect of an argument with your partner, if you both have full disclosure and a greater understanding of exactly where your finances are.
It is not uncommon for many of us to sometimes feel that we have lost an element of control over our finances and even to feel that you are fighting a bit of a losing battle to keep ahead of all of the bills coming in.
Putting together a budget allows you to take greater control over your expenditure and identify where savings can or need to be made. Once you get into this position and can see where you are going with your money, this can often help you to enjoy greater peace of mind.
Get a saving habit
As a general guide, to retain a reasonable level of financial independence and security, your aim should be to try and put at least 10% of your income away into savings each year.
This might seem like a tall target to aim at, but saving money regularly is often just as easy a habit to get into as spending it, so if you can be disciplined enough to set up a regular payment from your checking account into a savings account, you will soon almost forget about it as it becomes part of your monthly expenditure.
Getting that savings habit and putting money aside regularly, will soon provide you with a bit of a financial buffer as well as building up some money for the longer term. Being able to pay an unexpected bill out of an emergency fund that you have set up is a very prudent thing to do and is far less stressful than having to scramble around to cover a bill that you were not anticipating.
Join the savvy third
It is generally estimated that only about a third of households regularly utilize a budget, but when you consider how taking this action can potentially reduce your stress levels, it is a persuasive argument to consider joining that savvy third of the population.
Creating a budget is an important and pivotal step in the right direction towards improving your financial position and changing your life for the better.
Get started today and see if you can improve your financial health and reduce your stress levels as a result.
Eloise Poole has always worked in personal finance. Now in a consultancy position she generally enjoys helping people get themselves out of a financial rut and to learn better financial habits.