Budgeting is something that is talked about A LOT in the personal finance world. This is because budgeting is one the basic concepts of personal finance that can really get you started in the right direction toward getting your finances in order.
Almost everyone can benefit from budgeting no matter their personal situation. It doesn’t matter if you have a lot of debt, no debt, or fall somewhere in between. There are still benefits of budgeting. Here are four of the benefits of budgeting.
Budgeting Keeps You Aware of Your Goals
One of the benefits of budgeting is that your budget helps keep you aware of your goals. Some of your goals might be financial, like getting out of debt or saving up for a down payment on a house. But other goals may not seem financial, but believe or not reaching them still requires you to be in control of your finances.
For example, you might think you’ve been working really hard so you should take a vacation, but if you don’t have your finances under control you might not actually be able to afford a vacation. Looking at your budget will let you know if taking a vacation is possible or not.
Budgeting Allows You to Spend Money without Worry
Having a budget doesn’t mean you can’t spend money on fun things. In fact, having a budget means you can spend money without having to worry so much. Before I had a budget every time I swiped my debit card I hoped that it went through and I wasn’t over my limit. But now that I have a budget and I watch my finances closely I know how much money I have to spend on fun before I’ve hit my limit.
Budgeting Saves You Money
Another benefit I’ve personally seen since I started budgeting is saving money. Before I had a budget I spent money willy nilly without know if I could actually afford something. This often resulted in me acquiring overdraft fees on my checking account and I even had a couple of checks bounce. This was an expensive lesson for me to learn as each of the overdraft fees and bounced check fees were about $30 each. Ouch!
Budgeting Gives You a Warning
Just because you have a budget in place doesn’t always mean you stay within it. I’ve been budgeting for a couple of years now and I still struggle to stay within my budget sometimes. But budgeting does give you a warning most of the time before any major problems strike. For example, I haven’t over drafted my account a single time since I started budgeting because I have a warning on my account when it drops below a certain balance, and I also compare my spending to my budget frequently so I can stay on track.
There are so many benefits of budgeting your money month in and month out. The best thing about budgeting is that there are so many different ways to do it so you are bound to find one that works for you. There are free budget spreadsheets you can use, or you can use a budgeting app like Mint, or even an old-school pen and paper method, as long as it works for you and helps you stay on top of your finances.
Photo courtesy of: FirmBee