If you’re reading this blog, you’re obviously interested in saving money, paying off debt, or reaching a healthy financial state. Regardless of what your end goal is, it’s vitally important that you create a budget to plan and track where your money goes. So what are the advantages to budgeting?
You’ll immediately find ways to save money by identifying spending leaks. Maybe you spend more money than you realize on fast food or coffee or something else. If you find a number that’s way too high, you’ll know this is an area to cut back on to free up more money.
You’ll be able to prepare for emergencies. Once you identify spending leaks, you can cut back spending in that category, and why not throw the difference into an emergency fund?
You’ll reduce your debt. If you spend $50 a month on clothes, why not use that $50 to pay off the clothes you charged to your credit card last month?
You’ll reduce your stress level. Maybe ignorance is bliss, but when it comes to money, not knowing where you stand can be very stressful. Discovering you’re in more debt than you realized is stressful too, but by creating a budget, you’re taking a healthy step forward with your finances – and taking control will definitely help your stress levels.
You’ll help yourself reach your financial goals. Maybe you want to save for a down payment on a house, or take a dream vacation, or something else. Whatever your goal, you can add a category to your budget to help you save for it. Treat this category just like bills or rent or some other necessary spending category, and contribute that much to your savings account each week no matter what.
You won’t be surprised when your statements come in the mail. Your spending should be about the same every month, so when you’re budgeting and tracking your spending, you won’t get that sticker shock every time you open your credit card statement.
If you’re already a budgeter, what’s the biggest advantage of budgeting to you?