We all know that we need a budget whether we have one right now or not! Adulthood is difficult and stressful in general, but budgets can help make life easier. Sticking to a budget is much easier when you know what the true benefits of budgeting are.
In a nutshell, the benefits of having a good, solid budget are that you can plan for life’s curve balls as well as the fun times. But it’s also about being in control of your finances so you don’t have any nasty surprises along the way.
What is budgeting? Budgeting is about knowing your money, what you have coming in and going out of it. Your budget gives you full control over your money.
Advantages and disadvantages of budgeting
Below I’ve laid out 11 key benefits of budgeting, but what about the disadvantages I hear you say!
In my opinion, the main disadvantage of budgeting is that you have nowhere to hide when it comes to your money. Your budget will show you quite clearly how much money you have coming in and what you plan on going out during the month.
- If you are a chronic over-spender, your budget will tell you this.
- If you’re debt repayments are crippling you, your budget will highlight this
- And if you have a bad Starbucks habit, you guessed it, your budget will make it abundantly clear.
If you don’t like budgeting then this is a definite disadvantage. But let’s be honest, the reality is, knowing this information is a GOOD thing. If you use the information to help you budget better.
11 best benefits of budgeting everyone needs to know
1. creating a budget helps you set goals
You need a budget to have the right plan in place for your future. A good budget helps you set goals and also enables you to achieve them.
For example, saving up for your next holiday or saving up for a deposit on a house are both things that will help you achieve your goal of spending time or owning a home.
Creating a budget is not just about big financial goals, your budget can help you plan for birthday presents or a fun Christmas or a day trip.
The advantages of your budget are that it will get you from where you are now, to where you want to be.
Related post: How to Create a Family Budget: 7 Key Questions
2. You will Stop Overspending
When we’re feeling bored or low, we use shopping as a way to make us feel better. So many of us fall into this trap and end up spending money we don’t have.
And instead of making us feel better, it makes us feel worse! Because we know we shouldn’t have spent that money.
One of the best aspects of the budgeting process is that you can stop this random overspending. You will know how much money you have to spend and what the consequences for overspending could mean in terms of (more) debt!
No more going over your overdraft limit and incurring fees that you can’t afford. Your budget will show you exactly what is coming in and going out during the month.
It makes it easier to stay on top of your finances so when something comes up unexpectedly that needs paying for (like car repairs) you don’t end up broke or putting it on your credit card.
3. Budgets Can Make You Healthier
Believe it or not, there are many health benefits to having a budget. For starters, with a budget you will have better sleep, less stress from bills piling up and extra dollars for healthy groceries each week.
Without a financial plan for your money, anxiety can persist in your mind all day, leading to difficulty getting to sleep at night. But with a budget, you no longer have anything to worry about so sleep comes easily!
With more sleep, you feel refreshed and better able to tackle whatever the day throws at you.
When I’m relaxed and refreshed I feel able to eat healthily, I’m much more likely to cook and eat veggies. Whereas when I feel stressed I reach for the carbs and chocolate.
The benefits of budgeting can be felt in your waistline and your sleep patterns. As well of course as your bank balance!
4. You can save for Retirement
The benefits of budgeting go far beyond saving for holidays and a house deposit. One of the key benefits of a budget is that it makes it easier to save for retirement.
This is important because if you don’t have a good plan in place, life can be difficult later on down the track.
If you’re not saving when you’re earning money your benefits won’t match up with your responsibilities. Not only will this make you more miserable now, but when you are older there could be big problems financially.
Who wants to still have to work when they’re 75? Not me!
If your budget is in order and you start saving early enough, you’ll enjoy some wonderful benefits including peace of mind as well as an income stream during those golden years!
5. Budgets Reduce Arguments about money
Money is the cause of countless divorces across America and the world. Finding yourself in different places about finances can put stress on an otherwise healthy relationship.
A budget will help you and your partner communicate about money and personal finance more effectively.
- Listen to each other’s spending habits
- Understand each other’s views on debt
- Agree joint financial goals
- Understand what motivates you/them financially
- Agree accountability goals
These are all key elements for success. Take the time to talk and listen to each other when discussing financial matters so that both of you feel heard before deciding what steps should be taken next.
6. gives you control over your money
A budget is a way of being intentional about the money you spend. It gives you the opportunity to control your money and not let your money control you.
Budgeting is the best way to live large and get ahead. Without it, your stress levels can skyrocket from all of those unexpected expenses that come up (more often than we like).
You can also see where you’re falling short on good spending habits by budgeting!
When you know you are spending your money wisely it is one of the most empowering feelings. You get to decide on what you value and how best to spend it, without any guilt or regret weighing down on you.
Related post: How to Stop Living Paycheck to Paycheck: 7 Proven Tips
7. Budgeting Helps You Sleep Better
When you have a budget, it’s easy to see where your money is going, if you’re saving enough for retirement and how your debt pay off plan is going.
It’s also easy to see if you can afford something that has come up, like an urgent bill or something fun.
This means less worry at night because you know exactly what is coming in and what is going out.
The advantages of this are two-fold: You won’t have any nasty surprises when you get your credit card statement or your bank account statement at the end of the month!
And by having all these numbers written down, it will help with your sleep too! Too many of us lose sleep worrying about money. Because we haven’t grasped how important it is to budget and control our finances.
Create a budget, stick to it and you’ll sleep better at night, I promise!
8. Helps to Keep You Out Of Debt
When you have a budget that works for your life and income, it is so much easier to avoid debt.
Building a budget is like mapping out your financial future with a satnav. It’s easy to see where you can cut back and save money, while also helping manage overspending.
You’ll know exactly how much more of the credit card debt needs paying off this month without having to second-guess everything and make assumptions. Your budget will TELL you.
One of the greatest feelings is seeing your debt decrease each month in your budget. It’s a great way to stay accountable and know exactly where you stand with what bills need paid off!
And believe you me, the benefits of being debt free are amazing!
9. Prepare for Emergencies
The importance of budgeting is most obvious when it comes to financial emergencies. Being able to set aside money in an emergency fund is the first benefit.
But when that emergency happens your budget can help you identify where to cut back on to ride out being strapped for cash.
Sure you have your emergency fund to fall back on but you don’t want to keep spending like nothing has happened do you?
The benefit of having your budget is that it will show you what costs you can cut back or cancel entirely.
When my husband didn’t work for a year, our budget changed quite dramatically. Cable was cut, utility bills were slashed (we wore more layers instead of putting the heating on). And the grocery budget was much tighter.
We used some of our emergency money but not all of it. Because by looking at our budget we saw ways to save money.
10. managing your money makes you Aware of your Spending Habits
Budgeting helps you to become more aware of your actual expenditure, not just what you planned. When you save up for something and make it a priority in your budget, you know that’s how much you can afford to spend on it.
How many times have you booked a holiday or bought something without thinking about the cost? And then as soon as you get home or return from your trip, the sudden realization hits you: You haven’t got enough money saved up. Ouch!
And how much money have you spent on little things throughout the month? Those lattes, lunches and coffee expenses can really add up.
It’s easy to spend more than we earn without realizing it or being accountable for managing our money!
Your budget will tell you exactly where your money is going at any point in time. Which means if you’ve slipped back into bad habits that need a swift kick into touch then you’ll know about them straight away.
A couple of years ago I was shocked at how much my grocery costs had crept up by. The costs of an extra trip to the store here and there really added up over a month. Way more than the extra $10 I thought I’d spent. Waaaay more!
One of the advantages of budgeting is that there is nowhere to hide bad spending habits. They get found out pretty quick! And of course, once found out, you can focus on breaking those bad money habits and creating better ones instead.
11. you’ll have money to invest
In my opinion, nothing is more important than your financial stability. If there was one life lesson I wish I could drum into my (adult) daughters’ heads it is: Pay Yourself First.
So far I have failed in this task but I’m still working on it!
The saying “pay yourself first” means knowing how much you need to put away for retirement before paying any living expenses.
You adjust your lifestyle to make sure you can pay yourself first. Not create a budget then work out there is nothing left after paying all your bills.
Investing is a great way to get your money working on your behalf. Contributing early and often will help you achieve your retirement goal.
The True benefits of budgeting
In my mind the benefits of budgeting are clear. It’s a crucial tool for financial stability and success that can help you achieve your goals.
Budgeting benefits your mental health, finances, and personal relationships. I know budgeting can be a challenge because it requires you to make some hard decisions about what is important to you (and not so important).
However, you’ll find that having a plan helps reduce stress and puts more control back into your life. There is nothing more important than knowing where your money goes.
Start taking back control of your money by grabbing your copy of the Money Saving Starter Guide today.
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Last Updated on 13th September 2021 by Emma