Final answer:
A budget allows you to track income and expenses, cut wasteful expenditures, make financially responsible choices, save for emergencies, stay up-to-date with your balances, and balance income with expenditures to meet financial goals.
Step-by-step explanation:
Reasons for Keeping a Budget
Keeping a budget is essential for several reasons:
- It helps you track your income and expenses to manage your finances effectively.
- A budget can reveal wasteful expenditures, allowing you to cut costs and save money.
- Creating a budget involves making choices that may require giving up non-essential expenses in favor of long-term financial health.
- Having a budget is a step toward responsible adulthood, suggesting that you should also aim to save at least three to nine months’ worth of expenses for emergencies.
- Staying up-to-date with your finances is easier in the digital age, enabling regular checks and balances of your accounting.
- Budgeting ensures you have a plan for balancing your income and expenditures, which is crucial for reaching financial goals such as investing and risk management with insurance.
Overall, a budget is your financial roadmap that helps avoid overspending, saves for future needs, and prepares for unexpected financial changes.