What is one reason why budgeting is essential for financial health?

Budgeting is essential for financial health primarily because it helps track income and expenses. By creating a budget, individuals can systematically record their sources of income and the various expenses they incur, enabling them to see how their money is being allocated. This visibility is crucial for making informed financial decisions. When people track their spending against their income, they can identify areas where they may be overspending or where they can save money.

Moreover, a budget serves as a financial roadmap, guiding individuals toward their financial goals—whether that involves saving for emergencies, paying down debt, or planning for future investments. Ultimately, a well-structured budget empowers individuals to take control of their finances, leading to improved financial stability and peace of mind.