All of the reasons you should make a budget.
If you’ve been following here for a while you know that I preach budgeting to everyone and anyone who will listen! I truly believe that every single person should have a budget, regardless of how much or how little money you earn. Not sure what the purpose of a budget is??? Well I’ll tell you today, so keep reading!
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The Purpose Of Budgeting
I’ll be honest with you….years ago I did not believe in budgeting. I felt like it was something that was only for families that were pinching pennies….and my family seemed to be getting by just fine without a budget.
But then my entire thought process changed after I randomly picked up Dave Ramsey’s Total Money Makeover in the library one day. This book opened my eyes to how our finances could be, if we only adjusted some of our habits….so we started budgeting.
It honestly took about 5 years of trying, failing, giving up, trying again, etc. until we got to a comfortable/confident place when it comes to the budget.
One of the things I learned through this experience is just how much a budget can change your finances. Before we started budgeting, I really thought that we were fine the way we were spending, but once I had that budget to hold me accountable we were able to find so much extra money….and instead of spending that money on stuff (like the pre budget days) we were able to spend it on things that were much more important to us, like travel, retirement, saving for a car, etc.
If I can change my stubborn ways, anyone can!
1. A Budget Prevents Overspending
One of the most important purposes of a budget is that it prevents overspending.
If you take the time to make a budget and give every dollar a job, a category, then you will be much less likely to impulse shop and buy things just because they caught your eye (may or may not be talking about myself here….).
Try to get into the habit of checking in with your budget daily. This daily check in is so important to make sure you are staying on track, and to remind yourself of your money goals.
The days I don’t check in with my budget are the days I tend to impulse buy, because I convince myself we have enough money in the budget. However, if I take the time to look at the budget then I am more aware of my spending and am able to control my overspending impulses.
2. Budgeting Reduces Stress
It’s true! A budget can/will ease your financial worries resulting in a less stressful life. If you are budgeting with sinking funds (which I recommend!) then you will always be prepared for what’s to come, resulting in less stress.
For example, every year I make a sinking fund for Christmas expenses. I save into that sinking fund with each paycheck, then when the holidays come along I can buy Christmas presents, Christmas decor, and any other items I need/want for the holidays using the money I have already saved, which completely eliminates financial stress during the Christmas season!
- Related: How to Save Money For Christmas
3. A Budget Helps You Reach Your Goals
Another important purpose of a budget is that it will help you reach your money and savings goals.
Want to save for a vacation, but money keeps flying out the window??? Make a budget! Calculate how much you are spending in each area, look at the ways you can cut those costs, and then budget a sinking fund for vacation! Yay!
Yes, making a budget and cutting expenses will require some sacrifice on your part, but with consistency you will be able to reach those important goals. Budgeting has a way of helping you focus on your priorities.
4. Budgeting Helps You Spend Money Guilt Free
Most of us like to spend money….but we don’t like the guilt that often comes after spending money. And this is exactly why I love a budget! A budget gives you permission to spend money, guilt free!
Don’t believe me yet? Check out these two scenarios:
Allie wants new living room furniture. She has her eye on a couch at a local furniture store and notices it goes on sale one weekend. Allie excitedly runs to the furniture store to buy the couch.
She doesn’t have enough money to pay for the couch in full, but the store offers her to make monthly payments for a year to be able to buy it. Allie buys the couch and has it delivered.
The monthly couch bill begins arriving and Allie starts to panic. She didn’t realize how tight the monthly payments would make her finances. The stress of paying this bill, along with all of her other expenses begins to set in and she feels guilty for making this purchase in the first place. She realizes she acted on impulse, and doesn’t quit have the funds available.
Brooke also wants new living room furniture. She looks at a few different pieces of furniture at multiple stores and writes down their averages prices. Brooke then makes a sinking fund category in her budget to help her slowly save the money she needs to buy her new couch.
Over the course of 6 months Brooke deposits money into that sinking fund, using her budget. After 6 months her sinking fund is fully funded and she excitedly goes into the furniture store to purchase her new couch. She is so excited to purchase the couch with cash, and pay in full.
The couch is delivered and Brooke is able to enjoy it for many years. Brooke has zero guilt about this purchase because she knew she already had the money saved in her budget, and there are no surprise bills.
Do you notice in these two scenarios how they both have the same goal, and they both were able to achieve that goal, but one came with guilt and stress, and the other only came with joy?? A budget is so freeing!
5. A Budget Helps You Get Out Of Debt And Stay Out Of Debt
One of my favorite things about my little ol blog is getting to cheer you on as you reach your debt freedom goals. There is nothing I love more than receiving a message from a reader telling me how proud they are of themselves for being able to pay off their debt thanks to making a budget.
Budgeting helps you plan your finances in a way that makes debt pay off a priority. Being mindful of your spending, and prioritizing how each paycheck is spent is one of the most important steps to paying off debt.
If you are wanting to pay off debt, I recommend making a budget and also reading my article How To Pay Off Debt With The Debt Snowball.
6. Budgeting Helps You Understand Your Spending Habits
One of the most important parts of frugal living is being able to understand your spending habits, and a budget will show you exactly how you spend your money; including the good and the bad.
When you sit down to budget each week you will be forced to see the categories you consistently overspend in. Having this knowledge will give you the tools and motivation you need to reduce your spending in these areas.
When I first started budgeting I had convinced myself I was spending a certain amount of money on groceries each week. But, after making a budget, I realized the cold hard truth. I was spending so much more than I had realized. Once I knew that this was a category I was overspending in, I was able to teach myself some new skills to reduce our grocery spending.
7. A Budget Gives You Control Over Your Money
Do you ever get to the end of the month (or week) and wonder, “What happened to my huge paycheck I just got??? Where did all of my hard earned money go so quickly”?
I’ve had that thought, and it’s not a great feeling!
Do you want to know what my solution was? Yep! You guessed it, I needed to make a budget.
A big purpose of a budget is to help you have more control over your money, so that you don’t have to wonder where it all went at the end of each month. You’ll know exactly where every dollar was spent, because you made a plan for those dollars and you stuck to the plan.
Want To Start Budgeting?
Have I convinced you yet that a budget is life changing (cause it totally is!).
If you are ready to make the jump into budgeting, but aren’t sure how to start…..don’t worry! I have you covered! First, I recommend you check out my full budgeting tutorial here: Zero Based Budget.
And then download my free budgeting cheat sheets. They will walk you through everything you need to know to be able to make your first budget. You got this!!!
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