I don’t think any of us would disagree that a budget is a great tool for saving money. That those who do the whole budget thing are financially wise.
But how many people actually have a budget they’re recording their expenses in? I’d guess not many.
In this post, I’m going to lay out 10 simple reasons you should be on a budget.
KNOW WHERE YOUR MONEY IS GOING
The act of gathering information from last month, adding up all your expenses from your online banking or receipts, and categorizing them will alone be illuminating.
You’ll be surprised at the amount of money you’re spending, and where. This is an eye-opening process.
I don’t recommend you stop here, but if you do, you will certainly have a much better understanding of where your money is going.
Duh. One obvious purpose of creating a budget, is to cut back on spending. Once you’re aware of where your money is going, you’ll be informed for making decisions for the future.
Perhaps that $300 bill at Target was unnecessary. Even though you had planned to pick-up just a few groceries, a lot of non-food items ended up on that receipt.
You will stop and think before you add things to the cart, be it physical thing or a graphic on Amazon Prime.
You heard me right. Creating a budget isn’t strictly about restricting what you spend. Its also about carving out space to spend money on the things that matter most to you. Vacation. College. Retirement.
So maybe $200 of that Target bill above could actually go toward a mid-winter vacation with your significant other, if you had exercised a bit of self-control.
ADD INCOME STREAMS
If you don’t like how your income vs. expenses is playing out, do something about it. There are a lot of little things you can do to add various streams of income, without going out and getting a second job.
Here’s what I’m talking about. Have a yard sale. Sell furniture on Craigsist. Trade in gold and silver for cash. Sell stuff lying around your house on eBay. List your house on Airbnb while you’re going to be away.
Once you’ve set up a budget and you know what you need and want to have as income, getting creative with money-making ideas can help make ends meet and give you some wiggle room.
Even if you are surviving without a budget, you may be selling yourself short. Being more purposeful and proactive about financial planning, enables you to make goals and reach them.
And as you see certain savings categories increase, you will be able to celebrate small victories along the way to big ones. And when you reach big goals, the areas you’ve scrimped and saved will be worth the sacrifice.
PEACE OF MIND
I’ve heard it said, that a lot of people are one paycheck away from being homeless. And in a lot of cases, I have found this to be true.
Getting on a budget, controlling your spending, and saving money gives you peace of mind. The looming possibility of illness or job loss isn’t as dire when you have enough in savings in the bank to live off of for 3 months, in case of an emergency.
I know, it’s horrible of me to bring it up. But stuff happens. The kind of stuff a lot of us are up late at night thinking about.
If you have limited an area of your budget, I guarantee that near the end of the month, you will get creative when you feel the squeeze.
If it’s your grocery bill, you’ll force yourself to skip the store and use what’s in your pantry one night. Or if you need a formal dress for an event, you’ll borrow instead of buy.
You will become well versed at making do. And not just for the sake of dying to yourself. It will be to the end of gaining what you ultimately want. Those things that are priorities in your spending and saving.
NO MORE IMPULSE BUYS
Even if a Play Station deal is available on Black Friday at an irresistible price, you will be able to resist it.
If you go to the store for flour, you will not throw in 10 additional items, as you would if you were not on a budget.
Having a budget in place, means you’re accountable to something outside of yourself. If you buy that gaming system, it’s not going to go unnoticed. You will have to fess up, even if just to yourself, and reap the consequences.
Taking the time to set-up a budget and stick to it, does a great deal for building character, that will trickle into other areas of your life.
Organization and discipline are invaluable quality traits. I bet you won’t find an employer who does not place a high priority on employees that exhibit them.
GET RID OF FINANCIAL STRIFE
The main thing couples have and always will fight about, is money. Undoubtedly.
You know how it goes. Opposites attract. Which often means a spender and a saver end up sharing a bed.
One way to minimize quarrels over money, is to make a budget…..together. This requires the two of you to plan together. How does give and take relate to money in your relationship? A budget is where you can hash it out.
I promise, this will avoid a lot stress. Gone are the days of shock resulting from reading the bank statement, and seeing where your spouse splurged. Gone also are the days of feeling suffocated by a partner who doesn’t want to spend a single penny more than is absolutely necessary for survival.
My hope is not to overwhelm you by all the reasons to get your butt into action. Rather, perhaps this will be the last little nudge you need to take control of your finances. To plan for a great future, now.
How about you? What are some of the biggest benefits you have found, in having a budget?