Consequences of poor budgeting

What is a budget?

A budget is a way of managing finances. It is a money plan used to balance income to the house/business (money coming in) and expenditure (money spent). A budget should be reviewed regularly on a weekly, monthly or yearly basis.

What are the consequences of poor budgeting?

• A person may fall into debt.

• A person may need to use their bank overdraft and so face overdraft charges.

• A person may not be able to pay for all of their bills and face fines or late payment fees.

• A person may face possible eviction if they have not left enough money to pay their rent.

• A person poor credit rating if they are unable to repay credit card debt and this can make it difficult for them to apply for loans in the future.

• A person may face bankruptcy.

• A person may have what they own, house, car, furniture, repossessed.

• A person may experience mental health issues, worrying about not having enough money or not being able to afford basic needs.

• A person may experience relationship issues as they struggle with their finances.

• A person may find themselves borrowing emergency/short term loans - possibly putting them into more debt.

You should also read:

What is a budget?

Setting a budget: The importance of it