Today, I’m going to start out with a few points about the benefits of budgeting. For those of you that already have a budget set up, this may be confirmation that it is a good thing, but for those of you that don’t have a budget, it may present some points that will give you the push to get started.
The Benefits of Budgeting
A Budget Will Help Identify Where your Money is Going
First and foremost, a budget will allow you to identify where exactly your money is going. You’ll see just how much is going towards bills, clothing, entertainment and everything else you spend your money on. This is important to know if you want to gain any sense of control over your finances.
A Budget Will Help you to Control Your Money
Once you have identified where your money is going and you make a budget, you may be some hard choices to make at first. Maybe you realize you need to move to a more affordable house. Or maybe you discover that drinking a Starbucks latte everyday is keeping you from taking your dream vacation. It can be hard to accept that you can’t have it all. But once you get past that point and realize that by cutting a few expenses here, can allow you to spend more over there, budgeting doesn’t seem so bad. It allows you to prioritize what is important to you, and then live by those priorities.
A Budget Will Help Guide you in Planning Financial Goals
A budget is a plan. A plan for where you want your money to go. Say you want to do a bathroom renovation next winter. Unless you plan to set aside money every month, you won’t be doing that renovation. (Unless of course, you take on debt.) Without a plan, the money can too easily be spent on $100 trips to the mall. Having a budget helps you to plan and stick to your financial goals you hope to achieve.
A Budget Will Help you Prepare for Emergency Expenses
Having a budget will allow you to allocate money to an emergency fund for those unexpected situations that are bound to arise in your lifetime. A broken furnace, vehicle repairs, or an unexpected trip to visit an ill relative, to name a few. When you don’t have a budget, it’s easy to forget about those extra expenses that will most likely arise at some point in the year.
A Budget Will Help Give you Peace of Mind
Having a budget is what ensures you’ll have enough to pay your expenses. Since you’ve set aside money for your day to day expenses, annual property taxes, income tax, emergencies and what ever else you know is necessary in your life, there’s no need to stress or loose sleep.
A Budget Will Help you Feel Less Guilty about Spending Money
Once you start budgeting and tracking your finances you might find that you feel less guilty about spending money. Knowing that you have set aside $75 a month for clothing, for example, you don’t have to feel badly about spending it all or a portion on a pair of shoes that you fell in love with. When every dollar has a purpose, you can feel much better about spending in general.
Need help getting started with a budget? My popular Budget Binder Kit will help you get on the right track!
Having a budget is freeing, because you make the plan. It’s customized to your needs and wants. It’s also not set in stone. If you find that you miscalculated when you set the food budget, readjust. That’s the beauty of it. It’s your budget. Your money, working for you!
What are some other benefits of budgeting? Do you have any stories to share about how budgeting “saved” you?