Budgets are what prevent us from spending too much money. Exceeding a budget is a good sign that your expected planning is falling short and needs readjustment. At most a budget is usually for the month and is the summary of all expenses you can expect that fit within it. Though some people look down on the word since they think it means trying to restrict yourself more than you should, keeping a budget is a useful financial decision since the only reason you have to restrict your spending is so that you know you’ll still have some cash to spend on something else.
Learning how to build a comprehensive budget that gives you control of your finances is an essential skill of life. Budgets are how you spend your money efficiently without splurging on unnecessary things. Let’s say you don’t plan to spend more than a few hundred bucks on some new top-of-the-line speakers because you also need to buy a case to carry the speakers in. The case needs to be of high-quality itself because you’re planning on putting some expensive speakers in there. Now you only have a little over a thousand dollars.
The shopkeeper shows you some amazing pairs of speakers that have all sorts of added functionality which really make it appealing to you but it’s going to cost you all you have. If you didn’t set a budget, you might have gone ahead and bought them not foreseeing the consequences. Now you have to lug around those speakers with no protection or convenient method to carry them and this is a liability. Anything could happen to them out in the open. What if you were in an open field and it started raining? This is just an example.