Most of us would probably have heard of the importance of saving. But how many of us can truly say that we budget our spends each month?
What some of us would do is that we’ll have a budget list set out, begin using it, and then along the way revert to our old ways. Sounds familiar?
Everyone who sets a budget should do so with a goal in mind. That goal can be to pay off debt quickly, to put together an emergency fund, or even to gather enough money for an investment or a down payment on a house.
That said, to attain goals, you’ll have to be consistent in saving. This calls for discipline in sticking to your stipulated budget so that you do not spend the money which you intended to save.
Unfortunately, it’s not going to be easy. You’ll find yourself fighting through various temptations that arise and steering clear of your old spending habits. It is important that you constantly remind yourself about the many benefits of sticking within your budget. If you’re in need of a visual reminder, you should consider creating a vision board of what you are working to achieve.
Top 10 Benefits Of Budgeting
Need a refresher on the benefits of budgeting? Here are 10 advantages that you can look forward to when you begin to budget!
1. Financial Control
Budgeting provides you with control over your money. You’ll be forced to get intentional about how you spend as well as how you save money. Your finances are no longer a runaway freight train, when you are now in total control.
By having a good budget, you won’t have to deal with the stress of realising that you do not have money for a sudden emergency or need that arises. You’ll be better able to make certain choices, like sacrificing small pleasures that eat into your expenses in exchange of other benefits such as a vacation, or owning your own home and car.
2. Increased Focus
With a good budget, you can now focus on the goals you’ve set. The fact that you have your goals in place also causes you to avoid overspending as your focus narrows down to the achievement of the said goals. If your resources are limited, you will find that budgeting helps keep the goal in sight, and will also enable you to meet you current needs.
3. Increased Awareness
Have you even found yourself staring at your bank account and wondering where all your money went? Well, you’re not alone.
Most of us often find that we have no idea where our money goes. With a budget in place, you’ll be more aware of your ins and outs. In addition, with a budget, you’ll be able to spend within your current means because you know what you can and can’t afford. You are also able to take advantage of the various investment opportunities that come your way, and also to plan well for debt repayments.
Based on the allocation of funds, you’ll also realise the things most important to you. Among others, you can also figure out how well your finances are working for you, and to keep tabs on how far or how close you are to goal achievement.
4. Better Financial Organization
Since budgeting calls for dividing one’s finances into categories, one becomes better organized. Expenditures are also divided into different categories so that one is able to how much money goes into each expenditure. Expenditures become easy to make, one can refer to receipts, bills and financial statements with ease. Creditor questions are easy to respond to, and filing taxes is also easier.
5. Makes For Easier Planning
By putting together, a budget and following it, you can plan for the future more easily. You can then decide how they will put their money to use.
6. Enables You To Save For Expected And Unexpected Costs
The first thing you should save for is an emergency fund. With this money, you’ll not be easily caught flat footed in the face of emergencies.
7. Forms A Base For A Discussion On Money With Your Significant Other
If you work off the same budget as a spouse or other family members, talking about how money has been allocated becomes easier because the budget is clear. In addition, a budget promotes friendship and reduces conflict while improving teamwork. All family members should learn how to be accountable and responsible with money.
8. Alarm System
A budget gives off early warnings in the event that there will be a problem with finances. A budget enables one to see the big picture and with that, you can spot potential financial problems from a far off. This helps you to make the necessary adjustments even before the problem makes an appearance.
9. Guides On Debt
When you have a clear idea of your ins and outs, deciding on whether to take on debt is very straightforward because it will be based on whether you are able to afford it.
10. Allows You To Find Extra Cash
A budget helps one eliminate unnecessary expenses, which means that more money is freed up for savings or for the repayment of debt. These include late fees, penalties and interests. These unecessary fees, if avoided, can actually save you quite a sum of money in the long run. By eliminating these late fees, the money that you save can now be put to be put to better use.
With all that’s said, budgeting is the simplest and most powerful tool for you to effectively manage your money. It might prove to be a hassle in the beginning but in the long run, it can also save you from overspending and racking up credit card debts.
It’s also important to realise that budgeting doesn’t lead to a decrease in the quality life. You’ll just have to know how to spend your money wisely so that in the long run, it will be able to work for you!