No matter what career you choose – whether you’re working towards becoming a dentist, teacher, or race car driver – having a budget is important. In fact, budgeting is one of the most useful financial habits you can adopt. But if you haven’t tried sticking to a budget or haven’t experienced the benefits of one, it’s easy to wonder why tracking your income and expenses is such a key element of personal finance. Today, we’ll share the significance of having a budget with the help of 23-year-old race car driver Courtney Crone.
A budget helps you to avoid overspending
If you’ve ever driven a car, you probably understand that you shouldn’t push your luck by driving until the gas tank is empty. Similarly, it’s not wise to spend money recklessly until your checking account balance hits $0. Having a budget as a young adult allows you to allocate your funds strategically and even keep an amount of money aside for unexpected detours or bumps in the road. Yet, following a budget doesn’t mean you can’t spend money on anything fun.
One of the ways a budget prevents overspending is by making sure you allocate your income to the things that are important to you first. If you’re saving for a new car, allocate a portion of your paycheck to your savings account. If you like attending concerts, set aside a live music/entertainment fund. If you’re a race car driver, you can set custom budget categories for gear, training, car maintenance, travel, and race day-related costs. While there may be occasional expenses that cost more than you originally planned for, you’ll have a general idea of where your money is going at all times. By practicing control with your routine living expenses, you’ll develop the discipline to resist impulse purchases and better manage overspending.
“When it comes to motorsports, spending adds up fast. I realized how important it is to budget properly to have a successful race season. I learned how to save money for food, flights, hotels, and acquire sponsorships for income.”
A budget helps you create a stable future
You might experience moments when you feel like an excellent money manager, and at other times, recognize areas for improvement. This fluctuation is completely normal. However, significant financial instability can stem from a lack of experience with money, limited financial knowledge, or uncertainties about the future. Fortunately, brushing up on your financial literacy and adopting a good budgeting method can help increase your confidence and control over your finances. With a budget, you’ll know exactly where your money is going, where you can cut back, and how much you can afford to spend if you want.
One of the benefits of budgeting is that it’s customizable to your needs. For example, you may allocate $1,000 for rent, $125 for fuel, and $350 for groceries, depending on your personal spending habits. Once you have realistic amounts set for all of your expenses, you can strive to stay under these limits. These predetermined spending amounts will help bring stability to your finances, preventing wild spending fluctuations from month to month. By following a budget, you can stop stressing about money and work towards a financially secure future.
“At a young age, I learned how to budget from my mother. She instilled in me the importance of creating a plan to manage and allocate financial resources to have a stable future.”
A budget helps you become financially independent
When you live under your parents’ roof, you may receive some financial support. However, losing that support when you go to college can be quite a shock. Learning about the types of budgeting early can help you to transition more smoothly from living at home to being independent. A budget allows you to automate your savings, pay your bills on time, and spend money on the things that are important to you, like baking supplies or your Netflix subscription. Additionally, a budget can help specifically with managing debt. Once your student loans or credit card debt is paid off, you will free up more cash flow to direct towards your retirement savings or emergency fund.
Speaking of emergencies, they can often occur without warning. Whether it’s a rushed money mistake or a collision on the race track, being prepared for catastrophes before they arrive is critical. Having emergency savings at the ready ensures you can handle accidents without relying on others or going into debt. While you likely won’t be able to predict the future, budgeting for unexpected expenses can give you peace of mind and the confidence to deal with incidents independently when they do come up.
“When I turned 18, budgeting became instrumental in my ability to live independently. Like professional racing, it’s important to make thoughtful and strategic choices when it comes to your finances.”
A budget helps you race toward your financial goals
Due to the busyness of daily life, it’s easy to put off planning for your future. Yet, the money decisions you make today can greatly impact the quality of your financial life. Luckily, setting aside money to achieve your financial goals now can help you reach the checkered flag faster.
Maybe you have a short-term financial goal to clear your credit card debt by spring or a long-term goal to save up for a luxurious trip to Dubai or Japan. Creating a category in your budgeting app or template will help you start allocating money to your future, even if it’s just a few dollars each month. The money saved up now will help you race toward your money goals and reign as a financial champion in your own life.
“From racing sprint cars at the dirt track to winning scholarships, I strive to push boundaries…Staying on top of my finances by budgeting and spending responsibly is my winning strategy.”
Now you know the importance of budgeting as a race car driver (and in general). Just like the precision needed in racing, creating a budget requires extreme attention to detail. Even if racing isn’t in your plans, you can draw parallels between racing and budgeting to benefit your chosen career path. Remember, a budget can help you keep your spending in check, improve financial stability, become financially independent, and reach your short and long-term financial goals. We encourage you to utilize smart spending and a solid budget to fuel your adventures today.
