Budgeting is one of the best ways to improve our credit score and your financial future. It helps you understand where your money is going, where your priorities are, and where you stand. It is true what Solomon said ?Where your money is there your heart will be also.? A budget will make it plain to you where your money goes, what you support, and gives you the opportunity to change your priorities to better reflect your beliefs.<br><br>Without a budget your finances will suffer. A budget will help you to know:<br><br>1.What you have to pay for<br>2.When you have to pay them<br>3.How much you need to earn to meet your expenses<br>4.If your current lifestyle is viable long term.<br><br>If you don?t have a budget you hardly expect to improve your financial situation. Even with a growing income, without a budget your expenses will tend to grow faster then your income. If you make financial decisions by solely looking at your bank balance before you go shopping you are in trouble. A budget will make it clear to you how much money you actually have to spend.<br><br>A budget is simply a system for handling your income to your benefit. They are both an accounting ledger and a calendar. Meaning that it will keep track of how much money you need and when you need it. This knowledge will eliminate most financial ?emergencies? from your life. Emergencies like when your car breaks down or an unusually high heating bill. A good budget will have contingencies for these occasions and allow you to absorb these financial setbacks with little stress and credit gymnastics.<br><br>Your credit score is made up of five main sections, one of which is your credit history. When you have a budget you will find that you will be better able to keep track of who you need to pay when and how much. This will lower your chances of making a late payment which will hurt your credit score.<br><br>It will also help to prevent you from getting into to much debt. Since another section of your credit score is the debt to credit ratio. This ratio tells credit reporting agencies how you handle your debt. If you continuously get into more debt then your credit score suffers but if you maintain or slowly pay off your debt your credit score will slowly improve.<br><br>A budget will help you to:<br><br>1.Pay your bills on time<br>2.Prevent any payments from being mislaid<br>3.Prevent overspending of your income<br>4.Allow you to make intelligent financial decisions<br><br>This will change the picture that credit reporting agencies will have of your financial habits and in time your score will rise as a result.<br><br>If you wish to achieve financial freedom you will need to know:<br><br>1.What your current lifestyle costs<br>2.How much you currently earn<br>3.How much debt you have<br>4.How much you need to earn to develop enough passive income to provide for your needs in the future<br><br>If you have a budget this information will be readily available. Without one your income goal is simply a guess and will probably not provide the lifestyle you wish in retirement.<br><br>Financial freedom requires that the lifestyle you wish to have be supported by income which you don?t need to work for. This income can come from a variety of sources. Such as:<br><br>?Investments<br>?Businesses you own<br>?Real estate<br>?Royalties from intellectual property you have developed<br><br>Each of these financial vehicles requires that you have a solid credit score, money to invest, and time to learn. With the discipline of developing and running a budget you will gain the necessary habits it takes to provide the needed money or credit to take advantage of the financial vehicle of your choice.<br><br>Over all a budget will provide you with the knowledge to make good financial decisions, give you a track to run on, and tell you where you stand on your goals. With these three pieces of information you have the knowledge it takes to make wise choices and as a result your credit score will naturally improve.