Once you have created your budget and have compared what you have budgeted to what you actually spent it is time to manage your budget. Managing your budget involves making sure that what you are actually budgeting is correct and ensuring that the money you spent is used in the most effective ways. For example, you might look for ways to save by buying in bulk, a great example of this would be buying sports drinks in a package with multiple bottles instead of buying individually at a convenience store. You may also seek out deals in local flyers and try to buy items when they do go on sale instead of paying full price. Managing your budget is an ongoing task of making sure that your money is being spent effectively.

Summary

The importance of budgeting is paramount. Knowing exactly how much money is being made and how much money is being spent is the basis of financial literacy. When you budget effectively and do not run a deficit each month it is easier to stay out of debt. Debt can restrict your lifestyle and can add unwanted monthly payments to your budget which will further stretch your budget. We will go over this more in the budgeting section.