Do you budget? If yes then I’d like to ask – do you really love to budget? I don’t think many people would answer in a ‘yes’. Let’s admit we don’t really want to budget. Some of us do but that’s because of extreme financial difficulties. But there are solid benefits that make budgeting essential for all.
Even for the billionaires. We just need a trigger to start with it. for some it’s being in debt, for others, it may be due to a financial goal. For me, the trigger was buying our first home.
When you combine mortgage, property taxes, homeowners insurance and compare them with rent you used to pay, you sense fire – you start budgeting.
That’s what had happened with us.
My sincere advice to fellow readers – do not wait till the fire built up on your back. Start budgeting from this month. For rest of the post, I’ll go on putting points after points to convince you.
By end of the post if I can’t convince you, then just think of a country or a corporation that doesn’t budget. You’ll not find any.
The reason is very simple – budget controls spending and distributes spending evenly across various needs.
Many people, especially youth, have yet to appreciate the importance of a good budget.
A budget may differentiate between a comfortable life and one spent in debt. Budgeting is smart, it safeguards your future. Life is hard as it is without irresponsible financial decisions!
(See Also – Always Budget Your Finances and Avoid Surprises)
Here are 10 reasons why you should start budgeting today
Avoiding bankruptcy and debt
The main purpose of a budget is to control your financial activities, curb your spending and guide you to smarter financial decisions.
It is an indispensable tool to avoid falling into debt and struggling for years to get out, or even worse, filing for bankruptcy!
Having a well-planned budget will help you pay off your debt successfully, it is a financial safety net.
Without a budget, you will surely feel a nasty shock when your money suddenly runs out, weeks before your next paycheck!
Awareness of your current financial standing
By establishing a budget, you effectively sort out your current financial situation and know just how well you are doing, or how bad!
It will show you your financial trends over throughout your financial history and will give you an indication of which way you’re going if you keep your current spending habits.
In short, it is your financial conscience that will show you your naked financial reality!
Exposing your spending habits
A budget will help you identify all your spending channels and reveal the leakage expenses that always surprise you.
Leakage expenses are the little things we pay without notice, but in the end pile up to cause an unaccounted for a decrease in our balance.
Having a budget is ideal for trimming down your expenses and performing financial performance tuning.
It will encourage you to find more economical options for getting various products and services, such as buying in bulk or saving on cell phone plans.
Once you list down all your expenses, you’ll be surprised to see where your money is draining. And when you think deeper, you;ll find ways to stop those unnecessary expenses.
You’ll also be surprised to see how you start negotiating with your service providers, start looking for cheaper options, and start bargaining for everything, just to save more money.
If you don’t budget you may not feel the need to change your financial habits.
Related – Why Do Personal Budgets Often Fail?
Identifying your financial priorities
A good budget will show you everything you spend your money on and will act as a comparison ground for those spending channels.
While making your budget, you will identify and rank your financial priorities; you will put financial goals for yourself, you will be able to distinguish between your indispensable needs and your wants, which you can compromise on if you need to.
Revealing your spending trends
A budget is especially useful for identifying recurring financial trends, such as annual spending seasons (Christmas, summer, back to school … etc.) or periodic expenses such as vehicle and home repairs.
It gives you sort of a heads up early on to prepare and make sure you are able to enjoy these times without walking the financial tightrope!
Saving up for planned expenses
You cannot properly save up for your future without the financial awareness and organization your budget gives you.
Putting smart financial goals and following your budget are the keys to having financial security later on.
Nothing better than being able to cover your planned expenses, such as going on vacations, making major purchases, starting home renovation projects or investing.
Having an emergency fund
No matter how much we take care, no matter how good we prepare, there will always be emergencies in life that take us by surprise. When the time comes, having an emergency fund can mean the difference between life and death!
It is always good to prepare for such a time, as usual, it involves significant expenses.
You cannot be well prepared without a budget to help you save up and allocate funds properly to an emergency fund that will help you feel more secure and covered.
Creating excess funding
Life is not all about work, but also about enjoying your time and doing what you love, provided that you can pay for it!
A budget allows you to create extra funding for your hobbies and interest, or anytime you just feel like spending with less constraint than the usual!
Whether it’s a surprise celebration or new tools for your woodshop, without a budget you may never have the chance to enjoy them!
Related – How to Stick to Your Budget Consistently
Successful retirement plans
Retirement is meant to be the prosperity and relaxation you deserve at the end of your long career of hard work, but it is still up to you to make sure you are enjoying this treat not still working to pay off your debts!
Having a budget that includes your retirement plans will allow you to track your progress and make sure you are on the right track with the sweet relaxation!
Having a budget means you have less worrying to do about your finances and your future; you already know where you stand, where you want to go and what you should be doing to get there.
It will show you how much money you need to live and may even reveal that you can work less than you do and still keep the same lifestyle.
Having a budget simply leaves no room for the unknown!
Budget ensure less family dispute over money. You set the priorities and buying list beforehand. All the negotiations happen at the time of budgeting so, a clear expectation is set for all.
A budget controls your spending habits, making sure that you get more useful value with less spending. It is a smart way of handling your finances and securing a safer and more prosperous future for yourself!
Living your life with vague financials is not only risky; it almost always means a life of stress, debt, and paycheck-to-paycheck survival! A budget is one of the most useful tools you can ever use!
So, this new year set up a budget and control your finances.
Smart finance can fill your coffers, makes you wealthy, keeps you out of debt and gives you mental peace. Are these reasons not strong enough?
Nik @ Midlife Finance says
Budgeting is so important that it keeps your financial life healthy and balance. Without a proper way of budgeting, you will have the tendency to spend more without you knowing it and it’s not especially if you’re getting older.
Everyone should have a budget! We are trying to tighten our spending and stick more closely to our budget so that we can save for a house down payment.
Paul @ The Frugal Toad says
I agree that having a budget is important, the hard part is sticking to it! Setting realistic goals at the start can make a big difference in being able to stick with the budget and have success.
We’ve been using a budgeting system for over 3 years now and it has worked wonder to our net worth. Everyone should have a budget.
I agree with all points…I DO love making budget and sticking to it. We have been able to save and do much more than ever before our budget. And I don’t live in a constant state of fear of losing everything!
There is definitely one country I know of that doesn’t use a budget, though. The good old U S A!
Eric Payne says
Great tips on budgeting. It is really hard to maintain but you’re correct, a great motivation factor is needed to sustain it. Budgeting would help me get wealthy and become debt free!
Sandra Mercier says
Thank you for sharing the article. It’s very interesting. Hope to hear more from you.