These Are Some Amazing Benefits Of Budgeting!
Are you looking to get more into budgeting your money? You are NOT alone! These days, more and more emphasis is being placed on how we use our money – so the importance of budgeting cannot be understated.
But many ask “what is budgeting?” This is a question that should be addressed since it’s often a buzzword thrown around. It seems people just don’t know the actual meaning. Budgeting is simply allocating money to be spent or saved – and figuring out exactly how that is going to happen!
Now, there are some advantages and disadvantages to budgeting – but we think that the advantages of managing money properly outweigh the disadvantages. Money planning and tracking comes with major benefits!
When we talk about budgeting, we’re talking in terms of personal budgeting and managing personal finances – although, a lot of the messaging and mindset could be extrapolated to an organization, business, or project management. So, let’s get into the benefits of budgeting that we have discovered!
Opens Your Eyes
Budgeting definitely opens your eyes a bit – and we mean to the state of your overall finances. Tracking the money can really show you how much you spend on certain things – some of which can come as a shock.
Especially when it comes to smaller purchases such as coffees to go or snacks we often underestimate how much we spend over a month. Comparing your actual spending to your that you have created can open your eyes to better use your money.
Makes You Prioritize Your Goals
If you know where your money is going – and how much of it is going where – you will notice that you don’t an infinite amount of resources. That means you will have to prioritize certain goals since you can only allocate your money to a limited amount of budgeting categories.
Maybe one of your goals is to save up for the down payment of a house. Or maybe you are trying to pay off your student loans. By allocating certain amounts of money towards different categories, you have to decide what is more important right now. Going through the process of prioritizing your goals can be a good thing because it makes you really think about your money goals.
Let’s You Organize Your Spending
It’s important not to think of budgeting as being “restrictive” or that you will be unable to buy anything or enjoy life. Budgeting is simply a means through which you can organize your spending.
Budgeting means allocating a certain amount to different categories, such as savings, rent or expenses like groceries and morning coffees so that you can get a handle making more than you put out. If after accounting for all the necessary expenses you still have money to allocate, you can put it into your saving/investment category.
For us, it is important to think about savings/investment categories during the budgeting process and not go with the approach á la “If something is left over at the end of the month then I’ll save it”. With that mentality, chances are high that there won’t be much money left at the end of the month since you haven’t planned for it!
Related – How (And Why) We Use A Monthly Expense Tracker
Makes Investing Easier
Speaking of putting money to work, budgeting helps you save and allocate funds for investing. If you invest some, you can make more… and everyone likes more money, right?
You don’t have to think of investing as a scary, risky task – investing can be done with little risk and over long periods of time.
We are not investing experts so we don’t want to (and can’t) give you any investing advice – but there are lots of great resources out there if you want to learn more. A great book you can read on the topic is The Little Book of Common Sense Investing.
Helps You Pay Down Debt
Budgeting is a
You don’t have to be a statistic in these numbers – and it starts with money and lifestyle management. Budgeting can help manage
Makes Having Money Conversations Easier
Budgeting is also a catalyst for having conversations about money and spending. If it’s something that is never addressed – it can go on forever and remain a topic that is stigmatized.
Budgeting – or just the act of being more accountable to money coming in and going out – makes it easier to talk about money. That is important especially if you are living with a partner or have a family.
If you think that money is being spent unnecessarily on something you can have a conversation about it that is backed up by data. We are talking about civil, constructive conversations here – accusations and arguing won’t help you!
Allows You To Create A Safety Net
By knowing where money is going (and how much), budgeting can allow you to create a safety net of funds for a rainy day. Budgeting with what you make versus what you should spend each month can basically allow you to know more or less how much you can put away each month.
If this amounts can remain pretty steady month over month, then you can be sure of an accumulating total as the months go by. It’s always good to have a safety net since unexpected expenses can always be just around the corner.
Can Reduce Stress/Worry Over Money
Speaking of unexpected expenses, boy, they can cause stress and worry – can’t they? Budgeting can definitely help with this. Budgeting below your means allows you to save up money on each paycheck to cover the unexpected.
This ability to “plan for the unexpected” can relieve a load of stress from your life. These days, a ton of daily stress is caused by financial struggles – but it doesn’t have to be this way if you keep track of your finances. Again, you don’t have to limit your spending to unrealistic amounts – just reallocate and shuffle it around to the things that matter!
And there you have it – a few of the benefits to budgeting that we can think of (and have come up in our life). We just like the idea of keeping track of money because it allows us to have a handle on at least one more aspect of our lives! How about you? New to budgeting? Get in touch and let us know.
As always, Stay Curious,
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