To say budgeting has changed my life is an understatement. My husband wasn’t happy in his corporate management job but because of our lack of financial savviness, he was forced to stay in his position until we got our act together. Then in 2015 we discovered Financial Peace University and implemented the You Need A Budget software. Our finances have changed significantly since then and my husband was able to switch back into an hourly role that he is much happier with. The benefits of budgeting allowed us this freedom and are helping us reach financial independence.
If you haven’t discovered budgeting yet I highly recommend taking some time to study your finances and implement a budget. It will change your life and really open your eyes to how you are spending your money. You’ll have more control of your finances and you’ll be able to reach more of your goals!
5 Benefits of Budgeting
Budgeting Gives You Control Of Your Finances
Budgeting allows you to be intentional with your spending. You’ll have a better understanding of your monthly bills and what you spend on all of these miscellaneous items that creep up every month. Budgeting will open your eyes to how much debt you have (if you have it) and how well you are doing with your financial health.
Budgeting Helps You Stay Focused on Your Financial Goals
One of the biggest benefits of budgeting is the ability to stay focused on your financial goals. What is your biggest financial goal this year? Are you on track to meet this goal? Budgeting will allow you see exactly where you are spending your money and if you are putting enough toward your goals. The YNAB software is the perfect way to track your financial goals. They actually have a goal feature available in the software that will show you with colors if you are on track. It is truly eye-opening.
Budgeting Allows You to Look Long Term
You have yearly expenses and most of the time they creep up on you. Of course, you know this yearly bill is coming due but you aren’t planning for it. Benefits of budgeting include the ability to save for these expenses throughout the year. We refer to this as a sinking fund.
A sinking fund is basically small savings accounts for a line item with a due date and a specific amount. If it’s a larger yearly expense I highly recommend saving for these sinking funds throughout the year. This will not be such a burden on your budget when the bill comes due.
Benefits of budgeting include retirement savings. This is the largest long-term savings goal we all have. Imagine how different your retirement would be if you started saving at 25 rather than 35. When you become more aware of your finances you’ll notice the areas you are lacking.
Retirement is often one of those areas that we overlook because it is 20 – 30 – 40 years away for many of us. However, if we are strategic with our budget we can actually get ahead on retirement by investing early. For most, retirement savings and investing is a long-term game but if you start early enough you may be able to retire early! yes! Budgeting gives us the ability to see the big picture of our finances and plan long-term.
Budgeting Helps You Break the Paycheck to Paycheck Cycle
Have you ever wondered how people break the paycheck to paycheck cycle even if they are making an average household income with average bills for an American family? It seems like there is no margin in your finances but when you start budgeting you’ll see where you can make small changes. You can start to build your savings and break the paycheck to paycheck cycle. Once you meet this goal (if it’s a goal for you) your entire budget and financial outlook will change.
Breaking the paycheck to paycheck cycle has done wonders for our budget. All of our bills are paid at the beginning of the month and if a paycheck doesn’t come in for some reason (computer glitches, anyone?!) we know that we are okay. It has also allowed us to pay down more debt and make some larger purchases.
Budgeting Keeps You From Spending Money You Don’t Have
Debt is a huge epidemic in the United States. The statistics change daily but it’s easy to say millions of Americans struggle with debt. When you start to budget and get a true handle on your finances you’ll finally be able to break the debt cycle.
It’s simple. Don’t spend more money than you have. Yes, I said it simple. It is easier said than done but budgeting will give you the bigger picture so you can make these choices.
We went into credit card debt because we needed to feed our family and never had enough money. It wasn’t because we were a low-income household, we just didn’t have control of our finances. We supplemented our lifestyle with debt. Our priorities were out of wack and we just weren’t intentional with our money.
Now, we have control of our finances and a credit card isn’t even an option for us. Our emergency fund comes into play when a big unexpected expense happens and our monthly budget includes savings for those random things that pop up. Budgeting has kept us from going further into debt and for that, I am very grateful.
There are so many positive benefits of budgeting.
Budgeting will change your life. Budgeting is a total mindset shift. It will open your eyes and show you where your money is going. Tracking your expenses will show you exactly what you prioritize because it is where you spend the most money every month. It’s okay if your priorities look different than mine. Just own your budget and make the changes necessary to continue to meet your personal financial goals.