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Welcome to Day 2 of the Master A Budget Series. Yesterday, you learned about the Signs That You Need A Budget; today I will share with you the Benefits of Budgeting.
So let’s dive in.
It’s embarrassing but I have to admit that before I knew about budgeting (before I got married), I had the most terrible misconception of what budgeting is.
I thought budgeting was only for those who do not make enough and do not know how to save.
I thought I am saving money so I do not need to budget. WRONG.
There are so many benefits of budgeting that I didn’t know and I wished I had known earlier so that I could have started budgeting sooner.
A recent survey done on 1,000 respondents showed that 74% followed a budget and also 68% claimed that their financial situation improved after they followed a budget.
So if you are like me who misunderstood budgeting and has been pushing it to the side, read on. Do not make the same mistakes I did. The sooner you start your budget, the sooner you’ll get to financial independence.
Benefits of Budgeting
#1 Lets you know where your money is going.
When you have a budget in place, you will be tracking your expenses. By doing this, you will be aware of where every penny is going.
#2 Gives you control over your money.
Budgeting gives you the power to give every dollar a job. You can control how much you can spend on any of your budget categories.
#3 Reduces your Expenses.
If you do not have a budget, you might not even know how much you are spending on certain areas of your expenses. When we started budgeting, I was shocked to find out how much we were spending on eating out.
#3 Saves you Money.
When you have control over your money, you have the ability to reduce your expenses and save more money.
#4 Helps you set and track financial goals.
You can now set your financial goals because you can control your money. You can increase your savings, pay off your debt and reach your goals faster.
#5 Helps you achieve your goals sooner.
When you have a budget, you will know exactly how close or how far you are to your goals. This awareness will get you motivated to manage your money better so you could reach your goals faster.
#6 Lets you set priorities.
Budgeting has allowed me to prioritize our starter emergency fund before tackling our debt.
#7 Reduces your stress about money.
Knowing that your money is well allocated, you will be confident that you are prepared for anything.
#8 Pays off your debt faster.
If debt freedom is one of your financial goals, budgeting will help you save more money to pay off your debt.
#9 Allows you to enjoy your money.
By knowing how much you can afford, you will be able to enjoy your life and your money because you know that you will not be in debt.
#10 Prepares you for unexpected expenses.
Budgeting allows you to save for an emergency fund that can take care of unexpected expenses.
#11 Gives you peace of mind if your job is unstable.
When you have a budget, you will be able to save for 3-6 months worth of expenses. This saving will provide you a safety net if ever you lose your job.
#12 Allows you to invest more.
More savings mean more flexibility to invest more. You will be able to increase your investment.
#13 Organizes your spending.
Budgeting makes your expenses easier to understand and manage.
#14 Let’s you know what you can afford.
When you have a budget, you will be aware of how much money is left after all expenses are budgeted for. This will let you know what you can afford.
#15 Gives you a better understanding of your income and expenses.
Budgeting will give you a clearer picture of how much money is coming and how much is going out.
#16 Lets you plan for the future.
By having a budget, you will be able to build up savings that lets you plan for the future.
#17 Keeps you from living from paycheck to paycheck.
When you have a budget in place, you will be able to manage your money better. You will have a wiggle room for savings and for fun.
#18 Makes you feel like you just got a raise.
When you account your income and expenses on your budget sheet and you got left-over money after all expenses are budgeted for, you will feel like you just got a raise.
#19 Makes you afford things you want without using a credit card.
With your sinking funds, you will be able to pay cash for a big purchase or a vacation.
#20 Gives you more confidence when talking about money.
Now that you have control over your money, it will be easier for you to strike a conversation about money with your family.
There you have it!
Those are the benefits of budgeting that I wished I knew sooner. I hope you learned something from the part of the series.
Now that we’ve finished talking about the Benefits of Budgeting, next up on the series is I will share with you the importance of having Budgeting Goals.
If you haven’t yet, download the Master A Budget Workbook to practice what you will learn from this series.