Three Reasons Why Budgets Are Important

April 23, 2020

Creating a new budget can seem overwhelming at first. We don't like the idea of restraints, particularly when they involve how we spend our money. However, budgets aren't meant to keep you from spending money. They're designed (by you) to help manage and oversee your income. 

A budget can be one of the simplest ways to stay on top of your finances. It's also one of the most important. Your personal budget allows you to track spending habits, save for big purchases, and prepare for emergencies. While living by your budget isn't always easy, sticking to your plan will help you gain confidence in how you use your money. Here are a few points to think about when considering a budget.

Sense of Control

Have you ever thought, “Where did my paycheck go?" A crazy weekend, unplanned emergency, or just bad spending habits can burn through money quickly. Without a budget, there's no solid way to track these expenditures. Sure, we may have a general idea where our money goes, but without a budget tracking each expense, we can't fully understand how each purchase affects our income.

As we begin to learn more about how we spend our money, we give ourselves the tools needed to stay in control. With a budget in place, you'll be able to oversee daily purchases, monthly expenses, and long-term goals. You'll be able to adjust spending habits where necessary and enjoy a deeper sense of control over where your money goes.  

Be Organized

Budgeting isn't all about how you spend your money. That money all goes somewhere, and a budget helps you plan when, how often, and how much. These days it seems like there's a monthly bill for everything. Things like streaming services, utilities, rent, car payments and more all demand timely payments. The problem is, they're all scheduled at different times. Beginning of month, end of month, second Tuesday…it's all so confusing. 

Keeping a budget can help you stay focused and remain prompt in managing your expenses. This allows you to have a firm handle on what you can and can't spend and helps you be more prepared for the unexpected.

Build Savings

Who hasn't picked up a quick snack at the gas station or skipped the kitchen for a hearty meal at their favorite restaurant? Life should be enjoyed! And that new movie is definitely going to be worth it. The little things we spend our money on can sometimes be our favorite. They're the small freedoms we allow ourselves to help us stay happy and satisfied.

Sometimes, however, they can get out of hand. That's why keeping tabs on your spending is a smart idea. Think of budgeting as a way to trim the fat off your spending habits. You'd be surprised how much money goes to these little self-indulgences each month. Keeping up with your budget can help you determine when you should and shouldn't spend money so you can save up for the bigger things you've got your eye on.

Keeping Tabs on Your Money

If there's one takeaway from this post, it's the importance of knowing where your money goes. In fact, this entire post could've been summed up as just that: “Keeping a Budget Helps You Know Where Your Money Goes," but that's a tad too long for a title. 

When you know where your money goes, you can begin to manage your income. In turn, managing your income is a big step toward achieving your financial goals. Living on a budget can take a lot of work, but with patience and planning you'll see the benefits in the long run.