6 Simple Reasons Why Should You Budget

A question may arise, why is budgeting important?

Its always a good idea to know what are your spending costs each month

In doing so it then be used to work out to reduce these expenses or in some areas to increase it.

That is all well and good but why should you budget in the first place, here are 6 simple reasons to get you started.

1. Budgets help you know if you spend more than you earn.

A simple planner can help you figure this out for you.

2. Budgets help you know what you can afford to spend.

Some may feel fear to not spend at all, this is why budgeting can help relax those fears.

3. Budgets help you spend wisely and within your means.

Know how to do this effectively without the stress (see envelope system below)

“And give the relative his right, and [also] the poor and the traveler, and do not spend wastefully. Indeed, the wasteful are brothers of the devils, and ever has Satan been to his Lord ungrateful.” (Quran 17:26-27)

4. Budgets help avoid falling into debt.

All agree debts are not good for your health and hereafter. Here is a stark reminder

“By the One in Whose hand is my soul, if a man were killed in battle for the sake of Allaah, then brought back to life, then killed and brought back to life again, then killed, and he owed a debt, he would not enter Paradise until his debt was paid off.” (Al-Nasaa’i)

 

5. Budgets help getting out of debt

This is acheived by putting a plan into motion after having a bigger picture of all incomings and outgoings

“The soul of the deceased believer remains pending on account of the debt till it (the debt) is repayed.” (At-Tirmidhi)

 

6. Budgets help you become the upper hand and be self-sufficient

“The upper hand is better than the lower one (i.e., the spending hand is better than the receiving hand); and begin (charity) with those who are under your care; and the best charity is that which given out of surplus; and he who asks (Allah) to help him abstain from the unlawful and the forbidden, Allah will fulfill his wish; and he who seeks self-sufficiency will be made self-sufficient by Allah”. Al-Bukhari Book 1 Hadith 296

In conclusion

This hadith above truly lays down the purpose of a budget, which is to be able to sustain a good life for ourselves and our families, spend out of our wealth on lawful and good things, and to not be dependent upon others to care for us.

Indeed, Allah has given us the intellect and capability to achieve the upper hand and it can be done by managing our wealth with a budget.

Have you got any tips or resources that may be useful? if so, leave a comment below!

 

Some tips before starting your budget

Gather together all statements – Don’t be tempted to guess or estimate.

Decide who your budget is for – It’s very important to be consistent when budgeting.

Be as accurate as possible with your figures – It’s tempting to try to fool yourself by underestimating your expenditure

Don’t forget to include “one-off” spends – Whether it’s a holiday, car or special treat, we all have one-off spends that can affect our budget planning.

For those finding it hard to budget, try the Envelope System

Once you have your budget in place using the envelope system can be a good way to stick to your budget.

You can make it as simple or technical as you wish. All you need is to have separate ‘envelopes’, jars or online accounts.

Decide what spending categories you want to try to control using the envelope system.

Typically any area where you overspend is a good one to use. For many people this might be food, clothing, and entertainment.

For each of those categories withdraw your budgeted amount in cash or transfer it if using online banking.

Take an envelope / jar / account, give it a name of the category and put the money inside.

The advantage of the envelope system is it makes you stop and think. If you’re at the store and want to buy something, you look in the envelope.

If the envelope is empty you know that buying that item would put you over budget.

On the other hand, if you’re half way through the month and have spent more than half your food money it may not be a good idea to go out to eat that night.

It can also help those that have a hard time spending money.

If you open the food envelope and there is more than enough money for the rest of the month, you can feel better about having a treat!

Free downloadable spreadsheets resources

Here are some other downloadable spreadsheets that may work for you instead
• Spreadsheet for people who don’t know how to budget
• Budget Spreadsheet with Google Form
• Excel budgeting template
• Poor Man’s Spreadsheet
• Budget with Dashboard

Sources / Further info:

https://ukpersonal.finance/budgeting/

https://www.moneysavingexpert.com/banking/budget-planning/

https://theminimalistmuslim.com/why-budgeting-is-good-for-your-deen/