What Are The Benefits Of Budgeting
July 11, 2023
From the outside looking in, budgeting can seem overwhelming or even like a waste of time. But many individuals and households have stuck with it and made it a regular part of their monthly routine. They can attest to the benefits that come from taking control of your finances.
HELPS TO PUT YOU IN CONTROL OF YOUR MONEY
A budget is nothing more than a plan you are making for your money. It is hard to get ahead in your finances if you are not paying attention to where you are spending all of your money. When you have better information you can make better and more informed decisions.
HELPS YOU SET YOUR PRIORITIES
By sitting down and writing out a plan for your money you are saying what is important to you. We all only have a finite amount of money and a budget forces you to sit down and make the conscious decisions of what you prioritize.
HELPS TO REVEAL SPENDING HABITS
It is amazing how much you can discover just by simply paying better attention to where and how much you are spending. Most people have a pretty good general idea of what they are spending on things like groceries, dining out, or entertainment. But you would be surprised at what having a monthly budget can reveal about where all your money is actually going.
HELPS KEEP YOU FROM OVERSPENDING
There is nothing wrong with overspending in a budget category as long as we are making the conscious choice to do that. If we decide we want to go to the movies but we don’t have any more money to spend in our “Entertainment” category than we need to make a decision. If we are still going to go to the movies then where is that money coming from? Which other category are we going to take the money from. It is fine to move money around as long as we are doing it on purpose and with intentionality. The problem comes when we blindly spend with no knowledge of where that money is coming from, which is how many people can easily slide into consumer debt.
HELPS YOU BETTER PREPARE FOR EMERGENCIES
You can’t always plan for every emergency, but you can be better prepared for when they inevitably show up. We can utilize an emergency fund or sinking funds to help us to be better prepared for things like auto or home maintenance. We can’t always know what will go wrong but we can have money set aside for when it does.
HELPS YOU GET BETTER PRICING POWER
Many things today will give you a discount when paying in full instead of making monthly payments. Insurance premiums and subscription services almost all give you a better price if you pay annually instead of monthly. By utilizing sinking funds we can easily budget monthly for those items as if we are paying monthly and the money will be sitting there when the annual payment is due.
HELPS YOU REACH YOUR LONG TERM GOALS
When you start to get in the habit of planning your future expenses you also get to start planning your future goals. By taking control of your spending and getting your monthly expenses under control you will find that you have more money to set aside for your goals and dreams. Whatever your financial goals are, you can make a plan for it. You can break that goal down into smaller chunks and set aside a little money each month to hit it.
HELPS YOU BETTER PLAN AND SAVE FOR RETIREMENT
When it comes to retirement there are two variables that we can control. The amount of money we have and our monthly expenses. Budgeting helps you routinely save more of your earned income while simultaneously helping you control your expenses.
We are not sitting here claiming that just having a budget will cure all of your financial woes. We are also not saying that it is always easy, because it is hard work and takes discipline. We are saying that it is worth it and that we believe you can do it.
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