Who wants to be bothered with a budget? It takes time to examine what you spend, where you spend it, and how much (or how little) you bring in relative to your expenses.
However, if you have dreams of buying a home, paying down debt, taking an exotic vacation, or having a comfortable retirement, planning is vital. And the first step to securing your future is to be aware of how you spend your money today.
First you need to understand the overall picture of your finances--specifically, identifying how money flows in and out of your life--you can better see how to reach your financial goals.
If you're in the dark about how much you spend and where you spend it, changing your habits will be difficult. And even if you're financially comfortable, a budget can help you identify unnecessary expenditures and deduce ways to redirect funds towards your priorities. For example, if you don't realize you spend $100 per month on movies, it will be much harder to break that habit and apply that money toward a priority, such as saving for retirement.
Retirement planning is so vital to your future that it warrants special attention. Alot of Singaporeans have no retirement savings, they solely depend on their CPF which will never be sufficient, and many of those that do have a retirement fund don't contribute enough.
However, even less than $100 per month can increase your retirement nest egg by as much as tens of thousands of dollars, depending on how long you have until retirement and how well your investments perform. This is primarily because retirement funds receive tax-advantaged treatment, and gains have decades to compound. Planning is crucial for enjoying a comfortable retirement.
Also, plan to have a surplus for when you retire. Believe it or not, money will mean a lot more to you when you have less of an ability to earn it.
And it never hurts to have a little extra money in your emergency fund, and budgeting can help you save more so you can sock away extra cash for a rainy day.
Creating and following a budget involves self-discipline and sacrifice, but will help you develop wise spending habits to better manage your finances now and into the future.
Source from Yahoo! Finance
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