When you have a credit card, you can make purchases without worrying whether you have enough cash in your pocket or in your checking account to pay the bill. That makes budgeting and managing your money more important, not less important. Good financial management is necessary not only to achieve long-term goals; it's also important in the short term. It's the skill set that can keep you from overspending.
Staying in the Black
There's never a shortage of tempting things to buy. Setting a budget for how much fun spending you can afford each month keeps your spending under control. It's important not to overspend, and it becomes more important as your responsibilities -- student loans, car loans and mortgage payments -- add up. You can't postpone those payments or credit-card bills without penalties and added interest. With good planning and budgeting, you can prevent debt from getting out of hand.
Not having enough money to have fun, put gas in the car or pay the rent is incredibly stressful. The stress can trigger physical symptoms, which include high blood pressure and painful headaches. Sometimes the lack of money drives people to become irrational about spending, blowing all their money on gambling or compulsive shopping. Personal money management isn't as exciting as a night spent maxing out your cards, but it's a lot healthier.
Paying your credit card bills late or defaulting on your debts will come back and bite you. Bad financial management leads to a low credit score, and lots of people will look at your score in the years to come. Your credit history isn't just about getting a mortgage or a car loan. Employers often check it. Landlords check it. Insurers check it. Managing your money and keeping your credit history clean prevents problems.
Goals and Dreams
Money can't buy happiness, but it helps. Whether your dream is to run your own business, travel the world or climb mountains every summer, you'll need money to make it happen. Saving for a house, having a cash reserve when you open your new business or flying to Nepal to climb Everest are all long-term financial goals. For most of us -- except the super-rich -- having that much money available takes financial planning, budgeting and saving.
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