Maintaining a budget is a very good financial practice to get into. It helps you make sure that your expenditures don’t exceed your income. Yet, according to financial advisor Suze Orman, who appeared on the Oprah Winfrey show on October 13, 2008, organizations and individuals usually don’t prepare or maintain budgets because they don’t want to know the details of their finances. They believe that a budget will reveal to them how little money they have and depress them. A few years ago I offered to prepare a tax return for free for anyone who answered a questionnaire consisting of sixteen straightforward questions. I had hoped to use the answers to help me market my services better. One of the questions was about budgeting:
“Do you actively maintain a budget?” The answer given by almost all of the thirty or so people who responded was “no”.
Why is it so important that you maintain a budget?
A budget helps you control your spending so that you can have the money needed to pay for what you ultimately want, like a new car, a new house or a college education. You wouldn’t simply deposit a sum of money each month into a bank account to have the funds available for your desired item, because first you’d have to know how much you can afford to deposit each month. To know that, you’d have to have a budget, as it would tell you how much you can afford for the desired item.