Having a budgeting is simply balancing your expenses with your income. If they don’t balance and you spend more than you make, you will have a problem. Most people live lives that are above their income and three years down the line they get surprised at how much debt they’ve accumulated. Following a budget or spending plan will also keep you out of debt or help you work your way out of debt if you are currently in debt. Here’s a a list of more reasons to have a budget:
1. You will sleep better – You will sleep better knowing that your bills are payed up. Financial freedom will help you sleep better and will allow you to worry about something else but money. You no longer have to guess whether you can afford certain things, you’ll just know because it will be in the budget.
2. Acts as a roadmap – It will highlight the area where you are spending (or even wasting) most of your money. From there on you will know how to go about reducing costs. Make sure that you keep it updated with the changing of prises and costs.
3. It makes sure that you don’t spend money that you don’t have – With everything outlined and set according to priorities, you have no excuse to waste money. Efforts to stay within the budget will build new spending habits that can be maintained over time. Working within the budget will shift actual expenses from unnecessary categories into the most essential household categories. Money will be available for the most important expenses and debt reduction becomes possible.
4. Exposes spending habits – Creating a budget will force you to look at how and where you spend your money. When comparing your debt to your monthly expenditure, the budget will help lower the spending and focus on repaying your debts.
5. It prepares you for emergencies – Your budget should include an emergency fund that consists of at least three to six months worth of living expenses. This money will ensure that you don’t fall into debt after a life crisis. With life being so unpredictable, we all need a stash of money stored away.
6. Turns money into a tool – Your mindset towards money will change and instead of being led by impulse to spend, you will have control. You will value money more and it will be your tool and not the other way round.
7. It helps you keep your eye on the prize – A budget will help you map out your long-term goals and priorities them. Having something to look forward to will make the sacrifices you make worth it and reduce the temptation.