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Having a budget provides you with a plan for financial freedom.
Some people can come up with multiple reasons for not having a budget and spending their money as they make it. I have found successfully that a budget allows you to do more than you imagine.
A few years ago we had to buckle down, learn how to budget and cut our costs extremely. We were one of those couples that spent money freely until the economy tipped and one of us lost our jobs. Going from financially fine to unemployment is stressful especially with a family.
We had to learn how to budget, how to cut costs and how to really set practical financial goals. It took work, plus a lot of self growth that comes with debt and unemployment.
I can tell you that sticking to a budget allowed us to pay down our debt, take our children on holidays and we are setting goals for our financial future. There is light at the end of the tunnel.
Creating a spending plan
Budgeting is a plan for your money so you will always have the funds you need for the important stuff. And when I say important stuff food, shelter, clothing, health care and etc, are at the top of the list. But budgeting has many benefits and reasons.
Budgeting helps you know
How you can spend your money. Have you ever tracked your spending for a week or a month? If you haven’t you really should, it’s a great money saving technique. Even people on the tightest budget spend “fun money” on things you might question. We spent thousands on stuff we really questioned.
Keep track of your bills and receipts for a few weeks or a month and see where you are spending your hard earned money? How much did you spend on groceries or fuel? Use these figures to help you set up a budget you can stick to. If you need a budgeting guide see our Budget & Financial Binder for help.
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Budgeting gives you freedom
This reason is two fold. Once you pay down any debt using your budget and debt snowball you will have more funds to do with as you please. For example say you are making a monthly payment of $500 toward a debt that is due to be paid off in three months. Once this debt is paid off you will have $500 to put toward a vacation or other savings.
Budgeting also gives you freedom by allowing you to save for items. Say after looking at your spending you figured out how to save an extra $200 a month. You can budget or allot this $200 towards a vacation, a down payment on a home or another item you want.
Knowing where you stand financially gives you the room to do what you want.
Budgeting helps you meet your needs
How many of you are living paycheck to paycheck? Tracking your spending and keeping a budget will help you get out of the paycheck to paycheck, month to month struggle. When you discover how much you really need and what works in your budget you can start saving, start paying down debt, start working toward goals.
Budgeting makes sure there is enough to go around
When you set your monthly or weekly budget. You set enough to cover rent or the mortgage, you set enough to cover the groceries, you plan for the occasional coffee out and fun money.
You know how much money is coming in and how much to allow for all your areas of need. A great asset in keeping your budget in check is cash envelopes. You can read more about the cash envelope system here.
Budgeting sets you up for retirement
Budgeting teaches you what you can and can’t afford within the allotted amount of money given. Similar to retirement when you are on a strict income you need to be able to meet all your needs on what you have. Budgeting sets you up for a great retirement with the skills you learn and the knowledge that you can save or budget additional funds earlier in life so you will be more content later in life.
Budgeting teaches you so much more.
Setting up a budget helps to decrease money stress in couples and families. It helps you save for emergencies, pay down debt, save for a home, help pay for college and so much more.
Budgeting is a road map if you will for your hard earned money and all your goals and wishes in life. If you stay on plan, work hard, do some extra side hustles and stay on budget you should meet most of your goals. Yes there will be bumps, but you plan for these with emergency funds and the knowledge that you can make extra income doing (blank), or you can tighten the budget by doing one of these suggestions.