A huge part of budgeting is setting a spending limit. Some will say the act of budgeting itself thrives on being able to set a spending limit. If you never want to be in a position where you overspend or break your budget, then having a spending limit is in your best interest. As an individual, you want to ensure that you control your finances and are not spending money unnecessarily. By the end of this article, you will know what a spending limit is, its benefits and how you can set a spending limit for yourself.
What is a spending limit?
A spending limit can best be defined as any restriction on the amount you can spend when making a transaction or during a certain period. For example, if you have N100,000 you can use as a spending limit, you will not be able to put more than N100,000 on your card. This could be useful if you want to protect yourself from going into debt or spending money that you do not have. It also saves you from overspending and incurring late payment fees.
Benefits of a spending limit
Reduced impulse purchases: Making frequent impulse purchases can wreck your budget and saving goals. Setting a spending limit is important because it will help you avoid making impulse purchases and keep you from spending more than you can afford.
Helps you stay on budget: Setting a limit on how much you spend each day/week/month is the icing on the cake when it comes to budgeting because it helps you to remain disciplined by sticking with the expenditure routines stated in your budget e.g buy lunch, pay bills, etc.
Better control over your money: With a spending limit, you have more control over your money, making it easier to account for your finances. When you limit your spending and commit to sticking to it, it becomes easier to resist temptation and take control of your money. A spending limit also makes it easier to account for your finances and track your spending.
Helps you plan for unexpected expenses: Setting a limit gives you more financial freedom if something unexpected happens that makes finances tight e.g. an unplanned medical emergency, car repairs, etc.
How to set a spending limit
Apply for an account on Brassmoney.
Brassmoney allows users to set daily, weekly, or monthly spending limits to manage their finances better and spend less on unnecessary things.
Download the app from the App Store or Google Play Store to get started.
By setting a spending limit, you’ll have the cash you need to cover your other expenses. Plus, you’ll have money left to save or use on something else. A spending limit can also help prevent debt. If you’re already in debt and want to get out of it faster, consider setting a tighter spending limit to stay within your budget more efficiently.