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I am a huge fan of budgets. The reason I look forward to payday is that I like putting that money into my budget.
I know that not everyone loves budgets as much as I do. There was that time I was showing mom how easy YNAB was to budget with and she didn’t care. Shocking eh.
So today I going to try to convince you to start budgeting. Here are seven reasons why budgets are awesome.
Budgets give you freedom
You are might be thinking how do budgets give you freedom aren’t they super restrictive. But if you consistently budget they give you a lot of freedom.
It allows you to enjoy your dream vacation knowing that you are on track for retiring. A budget gives you freedom by funding your emergency fund so you are able to quit your job.
I love knowing that as long as I’m within category limits I can spend all the money I want guilt free. In fact, this is one of the main reasons I budget today. It was on and off for a while but the spending guilt kept me coming back.
Best way to manage money on a day to day basis
You might think a few dollars doesn’t make that much of a difference but with every dollar I spend, I’m making a choice. And that choice is either moving me closer or farther away from my goals.
I prefer to be moving closer to my goals and budgets are a great way to make sure you are doing that on a daily basis.
Something I hear a lot from YNAB is that your budget should be based on your values.
Budgets don’t have to be about saving money or paying off debt. They should be about what important to you.
Personally, I find giving back to be important. And I incorporated that into my budget with two giving categories.
Know where every penny goes
Once I start tracking my spending, I was often surprised by what I was spending on a monthly basis.
The cool thing with a budget is the more you pay attention to your spending the better you can budget.
Budgets are basically a spending plan for the future. It is different than tracking your spending which is looking backwards.
An example of that would be with how I spend money on clothes. I tend to spend a lot at the beginning of the season and then only a little in the next few months.
Every time I spent more I would feel guilty so I would cut back on my spending which would naturally drop anyways. Of course, that only lasted until the season changed and then I would begin the cycle again.
Now with my budget, I am always putting a little into the clothing fund so the money is there when I need it.
Things aren’t always linear so stay flexible. Be realistic when it comes to how much you can afford to spend. Know what commonly trips you up and try to think of ways around them.
Break the paycheck to paycheck cycle
Living a paycheck ahead is liberating. It means that even if you have lost your job tomorrow you’ll have a month to react and find a new job.
If you are currently living paycheck to paycheck it might feel impossible to get out of that cycle. Using a budget will make getting out easier.
Every time you get paid, try to budget a little bit for the next month as well.
It doesn’t have to be much to start out with it could be an extra $5 and slowing work that up into $20 or $50. If you save money one month you can use that money towards next month expenses. Don’t underestimate the value of small changes.
Budgets can help you reach your goals
You probably have some goals about money now. It might be travelling more. Or want to be able to quit that job you hate. Maybe you want to start a family.
All of those things involve money. Whether its for the plane ticket or furnishing the baby room you are going to need money to reach your goal.
Budgeting can help you reach your goals. You would need to know your goals first. I would recommend having some sort of financial plan.
Pay off debt + avoid taking on any more
Budgets can help you avoid taking on debt and they also help with paying it off. Debt sucks it holds you back.
Debt can keep you working somewhere you would have like to quit a long time ago. Having monthly payments mean you have to be cautious.
They can help you get out of debt. Making minimum payments on your debt is the slowest way to get out of debt. To truly start paying off debt you need to be throwing some extra money at it.
Budgets can help you by cutting expenses and figuring out exactly how much you owe. On the flip side of getting out of debt, budgets can also help you avoid going into debt.
I’m not going to get into detail here as that is a separate post on avoiding debt. But basically, it comes down to being prepared.
Budgets help you save more.
Saving money isn’t always easy. But budgeting can help with that.
There is a lot written about tips and tricks to help you save more. I do that too. I also have a post on 5 tips to save more. Yet savings more isn’t complicated.
The most important thing you can do to save more is to be intentional with your money. Think through where you want it to go.
In the moment lots of things can seem attractive. That takeout for when you don’t feel like cooking. The sale you couldn’t pass up. Or that treat you really deserved after the stressful week you had.
We as humans are very good at convincing ourselves we need something and that we need it now.
That works in the short term and we might feel good about it then. But later after the newness of it wears off there good feeling goes too. And we are just left with the consequences.
Lots of stuff we don’t like. Unhealthy habits. And empty bank accounts.
You don’t have to give up everything to save more. You can start small. Put $5 or $50 every month into a savings account whatever you can afford. And then try to up that amount.
There are a lot of different reasons to love budgets. For freedom, it gives you, how it keeps you in touch with your true expenses. Budgets can help you reach your goals and avoid things like debt that would drag you down. They can also help you save more.
P.S. If this post made you want to start budgeting check out this post which shows you how to start budgeting.
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