Budgeting is a simple but extremely effective tool for really getting organized with your finances. It’s a mystery to me why so many families ignore starting a budget when they are struggling with their money.
We often think that budgeting is a waste of time and a ton of work but really, it’s a simple task that can be done in just a few hours a month and there are so many benefits of budgeting.
If you really want to get ahead with your money, the first step is to start having your money work for you. When you have a budget you’ll be able to allocate your money exactly where it needs to go for maximum success.
Your budget is going to stop you from constantly overspending and not doing the things you really want to do. You can really make a plan for your future and experience all of these benefits of budgeting!
1. Keeps You Aware of Your Spending
One reason why a lot of people are struggling with their money is because they aren’t actually aware of where their money is going. They’ll spend and spend on things they don’t need without ever even looking at their bank statements.
When you have a budget, you’ll be able to look at your spending habits each month and realize all of the places you’re putting your money that you don’t need to be.
You’ll find unnecessary food expenses, clothing you didn’t really need to buy, and tiny costs that are really adding up. You’ll be able to cut a lot of these costs and pay down your debt, and start saving way faster.
2. Helps to Organize Savings
When you create a budget, you’ll be separating different expenses into certain categories (i.e., spending, debt payoff, and saving) and seeing these categories visually can really change how much you save.
When you see the amount of money you’re spending versus saving, you may get a little annoyed at how much money you’re throwing away, and move a ton of the money toward savings instead of spending.
Having a budget can also help you create sinking funds for expenses that you know are going to appear. These are accounts where you save a bit each month to cover something at a later date (i.e., $50 a month for the holidays).
You’ll be able to have lines in your budget for each of these sinking funds, making it so you use less credit later on.
3. Keeps You on Track for Your Goals
When you start your first budget, you should start it from a place of future goals and plans. You need to know what you want from your money and where you’d like to be in 5 years.
Having these goals in mind is vital because you’ll be making your budget around your goals! You can add items for things like saving for a mortgage downpayment, paying off your car, or going on a nice vacation.
When you have financial goals without a budget, you’ll often forget about them when you get paid and they’ll take much longer to for you to get them done!
4. Gives You Control of Your Money
When a lot of people talk about money, they talk about it like they are controlled by money. Like simple money tasks are forcing them to make decisions they don’t want to, like moving to houses they don’t want, and taking jobs they hate.
Having a budget is going to help a person take control of their money instead of letting their money control them.
Having a budget will give you the control to pay off your debt when you want to, and the control to make decisions about your life that aren’t being influenced by your lack of funds, since you’ll grow a savings and you’ll have the funds!
5. Helps Your Money to Work for You
When you have a budget, you’re able to organize your money in a way where it can start working for you. You’ll be able to start investing your money in a way that will benefit your future.
A lot of people say saving for retirement but really, you’re investing for retirement and you should start as soon as possible.
When you have a budget you can try out the principle of paying yourself first and start putting money toward your retirement as soon as you get paid.
This of course, works better than waiting until the end of the month to transfer money to your savings and retirement. This means that your money won’t be working for you since most months there won’t be any left over.
It doesn’t have to be thousands of dollars a month since most of us couldn’t afford that, but making a plan to invest in our future each month and have that money make us money is always a great idea.
6. Helps You Plan Your Career
Having a budget is actually an essential part of having a plan for your career, seriously! Most people don’t think about their budget when they are making large career decisions when they really should.
When you have a budget in place, you’ll be able to tell the best times to move to a new job, when you need to start a side hustle, or if you can afford to stay at home with your kids.
Without a budget, you’re probably making a lot of these decisions in the dark and this could lead to you having big unexpected expenses in the future.
7. Allows You to Save For Unexpected Costs
One of the biggest budget killers can be an unexpected emergency expense. Did you know that most people in North America aren’t able to cover even a $400 emergency?
This means they wouldn’t be able to fix their car if something went wrong, or get a new roof if a giant tree landed on their home. These things happen, and you need to be prepared for them.
Having a budget will help you build up your emergency fund because you’ll be able to add a line in your budget for adding to this account.
The absolute last thing a person should do for an emergency is use a credit card, especially if you’re trying really hard to pay off your debt.
This is one of the biggest benefits of budgeting because you’ll be able to slowly save your 3 to 6 months of expenses and you can finally be prepared for these unexpected expenses.
8. Tells You When You Need to Make More Money
A lot of people think that all of their money problems stem from having too many expenses but a lot of the time we don’t think about how making more money could really solve all the problems instead of cutting expenses.
When you have an organized budget for your money you’ll really get a picture of whether or not you have enough money to make ends meet. This can let you know when it’s time to ask for a raise, or when you should start a side hustle.
This may mean going back to work early after having a baby, taking less vacation time if that can help you, or starting your own business. It’s really up to you how you grow your income!
9. Organizes You to Pay Off Debt Faster
There are so many common ways that people are able to go into debt. We take out student loans, car loans, get a mortgage, and rack up money on credit cards.
Getting out of debt is a really smart idea because when you no longer have monthly debt payments you’ll have so much more money to put toward savings, investing, and fun!
Having a budget will organize you and educate you on all the important parts of your debt. You’ll have more information and focus on things like how much you owe, the terms of your loans, and interest rates.
Understanding all of these things may actually convince you to pay it off faster!
Your budget will also help you organize your money, and spend less of it, so you can put more of your money toward paying off your debt and getting out of debt earlier.
10. Helps You Talk to Your Partner About Money
A lot of people see talking about finances as taboo and something that shouldn’t be discussed, and this thought process makes it hard for us to even talk to our partner’s about money.
While most people don’t like talking about money, it’s so insanely important that you learn how to talk about money with your partner.
When you have a budget you’ll know the facts before you start a conversation about money, this will make it so much easier for you to know what’s going on and not be so flustered when talking about it.
A lot of relationships break down because of fights about money and people are letting this happen because they are too scared of the topic to keep their relationship strong.
When you’re in a long term relationship, your money because our money and you need to know where the money is going to really do well. Having a budget can make the two of your become a team and really change your future!
11. Stops You From Wasting Money on Food
One of the biggest things that the average person wastes their money on is food. Whether it be buying too much groceries and throwing food away, or eating out because you didn’t properly budget for your weekly groceries and you ran out.
Having a budget will help you understand your average monthly food spending and how much money you actually waste on food each month.
If you add a meal plan to your weekly grocery shopping, you can even save more money by understanding how much food you actually need.
12. Allows You to Live a More Stress Free Life
When you have a budget, you’ll know exactly how much money you have to spend every time you’re walking up to a cash register. We’ve all been there, having that awful feeling of not knowing if our debit card will come up approved or declined.
The amount of stress we experience during these kinds of situations can really ruin our days, or even our weeks. It causes so much anxiety that we just don’t need.
In addition to knowing exactly how much money you have to spend each time you go to the store, you’ll also be able to plan for actual relaxation times like vacations.
You’ll be able to make a plan in your budget to go on that vacation you’ve been dreaming of for years, or go to the spa for your birthday, as long as you plan for it.
Budgeting really can change your life and eliminate tons of your money stress!
Those are some of the best benefits of budgeting, we love budgeting here at Not Quite an Adult and we absolutely think that every single person should have a budget that they work on every month. Doing this can seriously change your life and your finances for the better!
Here are some awesome budgeting resources you don’t want to miss: