Does the thought of creating a budget sound like a nightmare?
Would you rather do anything than take time to create a budget? Sitting down to analyze your finances can be a daunting task. Numbers don’t lie! The truth about your financial situation lies in a budget.
The Benefits of Budgeting
Some people avoid budgets because they are scared that they will no longer be able to spend their money as they wish. Budgets can seem like a strict plan for those who to don’t care to track every dollar.
Budgeting can seem confusing because there are several options for how to manage and track your spending. The truth is that the best budget is the one that works for you. Before you get too bogged down or overwhelmed, let’s discuss the benefits of having a budget.
1. Strategizes Your Money
A budget is simply a financial plan for your money. Planning provides guidelines and goals for your future. Planning involves thinking about the activities you’ll need to do in order to reach your desired outcome. Your money strategy is extremely important because this is how you’ll reach the financial results you desire.
2. Reduces uncertainty
When you budget your money, you will have a crystal clear picture of where your money is going. Ever have the feeling that you don’t know what happens to your paycheck? With a budget, you won’t have to wonder.
3.Notice Trends Over Time
Tracking your spending habits over time can help you notice money habits you may not have known about before. When you have a plan for your money, you’ll begin to see what type of spending you do outside of your “assigned categories” or even if you are overpaying for certain things. Spending will never go away, but you can spend your money smarter.
4. More Control Over Your Finances
If you are the type of person that doesnt feel the need for a sense of control over everything, a budget may be an uncomfortable idea. Don’t approach a budget as the need for control over all things all the time, but more as a sense of control over your money. With more control, we risk less and are better prepared to handle unexpected events.
5. Focus on Your Financial Goals
Your financial goals are unique to your situation. You may want to be debt free, save for a home, or vacation. One of the benefits of budgeting is that it allows you to hone in on your financial plan and crush your goals.
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6. Avoid Unnecessary Expenses
When you’re spending with no plan, it can be easy to accumulate bank charges for things like overdraft fees, ATM charges and service fees. These extra charges are completely avoidable when you don’t overspend due to preparing or planning.
7. Helps You Save Money for Life’s Surprises
It’s true, unexpected changes and turns in the road are just a part of life. When you have a budget, you can plan to save money for your emergency fund. An emergency fund is a safety net of cash you can easily access for unplanned expenses. With a budget you can plan to save or see where you can cut expenses to save.
8. Avoid Impulse Buying
Lots of people think that because you have a budget, you wont get to buy the things you want anymore. This is not true, a budget helps you to not spend money you don’t have. You can still include money in your budget for the things you want without the guilt or repercussions of overspending. By allocating this money in your budget, you’re giving yourself permission to spend.
9. Prevents Late Payments
If you struggle with paying your bills on time because you just don’t know whats due and when to pay it, a budget is just what you need to fend off those charges. Since your fixed expenses will be categorized, you should be able to allocate money to those bills timely.
10. Helps You Invest In Your Future
If you eventually want to retire, stay at home with your family or have the financial freedom to stop working a full time job, budgeting is a surefire method to help you achieve your goals. Budgeting will help you organize and plan for the life you want to live. A budget will actually help you put action into your dreams.
Who Needs A Budget?
A budget is for EVERYONE. Regardless of your income, having a specific plan for your money is just smart. Budgets are for:
People who want to get out of debt
People with low income
People who struggle with impulse spending
People who who want to save money
The great thing about budgets is that they are NOT one size fits all. Your budget can be tailored to your specific intentions or target. Maybe the cash envelope system works best for you, or you do really well on a zero based budget plan. Budgeting is flexible and if you pick one that doesn’t meet your needs its easy to change direction. You need a plan to be successful.
How To Make Your Budget Work To Your Advantage
Now that you know some benefits of budgeting, how can you avoid making mistakes that may cause you to feel your budget isn’t working?
- Make sure it;s accurate. Budgets work the best when you have accurate data. Now is not the time to make assumptions or guesstimate your income and expenses. Make sure you have the right numbers to create your budget, so that means you may need to take a long hard look at your finances.
- Time Required-Speaking of time, many people put off a budget because the initial creation can take some time. Our lives are busy enough as it is, but finding the time to get your finances in order is so important. The initial budgeting planning session may take some time, but future check ins should take less time. Since the framework is in place, you can just check back to make sure everything is running smoothly.
- Family Affair- Budgets can be affected by family dynamics. Taking the time to talk to your family about the money goals and plans is essential to making sure everyone is on board with the financial priorities and goals.
No time like the present to save this to your budget or money board!
Are you starting to realize the benefits of budgeting? Remember, it takes just as much time to dream as it does to plan, so start taking steps to make your dreams a reality.
