Why Is Budgeting Important?
Budgeting can seem SO confining yet it is an essential part of a healthy financial future.
If you were running a business and did not use a budget, the business would quickly fail as fall under, eating away at your profit and driving you into debt.
However, many people run their households just the same and wonder why they are feeling money stress, and confinement in life.
If there is a lack of a budget, spending can get out of control and debt quickly piles up. It can become a fast-track for disaster, as we continue spending frivolously to ease our stress and the cycle becomes a humungous mound of debt and we seemingly cannot dig out a way out.
Nonetheless, debt is damaging to not only the spender but the entire family, as it causes unneeded stress and money worries. This stress can even trickle down to our youngest family members, leaving them wondering why mommy constantly says, “No, we can’t afford it.”
Therefore, budgeting is extremely important for the average-or any- family, and getting your personal finances in order can help eliminate debt and money worries.
What is Budgeting?
Budgeting is keeping track of your finances, whether it be through a budgeting app, paper, and pencil, spreadsheets, or the like. If you are budgeting, you are keeping track of how much money you have coming in and how much you spend each week or month. A budget uses these figures to help you pay bills on time, save money for the future, and pay off debt. In short, a budget is a means to keep track of your personal finances, so you can be financially sound.
Get your Budget Packer here and start budgeting today!
10 Reasons Why Budgeting is Important for the Average Family
As you can see, budgeting is extremely important for any family to keep track of finances. And the best way to start anything is to take action. Use these tips to help you learn why budgeting is important and how you can start a budget now.
#1 Budgeting Gives You A Good Grasp of Your Finances
If you want to know what is going on with your finances, budgeting is the way to go. A traditional budget will help you set up a plan to keep track of your money. Some of the benefits of tracking spending and budget are as follows:
- pay down debt
- stay out of debt
- save money
- meet financial goals
- get ahead
A simple budget will help you keep track of the above so you’ll have better control over your money. As you continue to budget, you can make adjustments and pay down debt or save for an emergency fund. Once a debt is paid off and you have a cushion, you can save for fun stuff such as a vacation or celebrations.
#2 Budgeting Helps You Set Financial Goals
Once you have a budget in place, you can take a look at how much extra, or lack thereof, money you have left at the end of each month. Depending on your budget, you can set some clear financial goals to help you achieve where you want to be financial.
If you have a lack of money and are overspending, you can set goals to cut back and pay down debt.
Yet, if you have an excess of money at the end of the month, you can put money towards an emergency fund, sinking funds, investments, or savings.
You can set aside money in sinking funds and save for vacations or use your money for a down payment for your new car or house. (By the way, I always buy used cars!! )
Your budget will help guide you and once you reach certain goals, such as paying off debt, you can set new goals accordingly.
You and your family will be better off, using a budget to plan ahead instead of carelessly spending, not knowing how much you will owe at the end of the month.
#3 Budgeting Helps You Save
As stated above, once you see where you are financial, you can plan for savings. You can use a high-interest bank to help you save more.
Your budget will direct you and guide you.
This post will help you decide which budget is right for you so you can learn how to save more and not feel confined:
Find the Perfect Budget for You
and this post will help you become a better saver in six easy steps.
#4 Budgeting Helps You Plan Ahead
If you are allotting for everything in your budget, you can plan ahead and save more for months of high spending like the holidays. If you have a set budget and a set income, it makes it easier, yet if you are on a varied income, planning ahead is even more crucial.
Your budget will help you save for things such as weddings, school expenses, dental expenses, and so on. If you make more in one month, make sure to set aside money for the months that are not as profitable.
If you know you have a dental cleaning every six months and there will be a co-pay, make sure to factor this into your budget. Perhaps you have pets and you have annual vet bills.
Furthermore, any annual or bi-annual expenses should be included as you plan your year. You can split these payments up and put them away in sinking funds so the money is when you need it.
#5 Budgeting Helps Eliminate Stress
According to this site, one of the leading causes of stress in families is money. The lack of enough money can cause stress in any situation. Not to mention, if one person overspends while the other is frugal, this can cause money disagreements. Yet, if you plan your finances as a family, you will see why budgeting is so important and can help create a plan you came up with together.
Your family will be on the same page and know how much each can spend and save, what is needed for bills, and how much is in retirement.
Budgeting will give you financial security and make you feel financially sound, so you don’ have to worry about money anymore.
Other Budget Posts:
- 30-30-30-10 Budget Plan
- 6 Simple Tips to Help You Stay on Budget
- How to Overcome Budgeting Challenges
- Best Personal Finance Books
Don’t forget to pick up your budget planner in the Printable Shop!
#6 Budgeting Helps You Gain Perspective
It helps to be in the know as to where your money is going and how much you spend each week. When you know these numbers you gain perspective and you are able to budget better instead of guessing and putting yourself in debt.
As you start cutting things from your budget, you will often realize how little you miss many of these things and hone in on what is really important to you and your family. Perhaps your expensive purse or new iPhone can wait while you pay off debt and it is often fun to find free things to do as a family. These will be lasting memories that will help you forget about the material possessions and learn that spending time with the ones you love is truly fulfilling.
#7 Budgeting Helps You Pay Off Debt
You can pay off debt quickly when you know how much you are putting toward your debt and how much you can add to each debt, as you pay them off one by one.
If you are in debt, like many Americans, you can use a budget to begin a repayment plan. You can use cash envelopes and a debt thermometer to keep track of how much you owe and any progress you make. After cutting items from your budget, use the extra money to pay off debt.
Once a debt is eliminated, use your extra money to save and invest. In this way, you will make a profit on your money and make y our money work for you.
#8 Budgeting Helps You Stop Overspending
If you tend to overspend, you can take a look at your spending tracker and find areas that can be cut from your budget. You can look for things like subscriptions you no longer use, gym membership that can perhaps be put on pause and cutting cable. Remember, you can add some of these things back in once you pay off your debt. Next time, keep better track of your finances so you are not in a “debt” situation again.
How to Budget and Still Have What You Want In Life
#9 Budgeting Helps You Get Crystal Clear on Finances
If you are “crystal clear” about your finances, you are in good shape. If you can, budget down to the last penny, even if you are adding a “savings” category to your budget. Know how much you can spend on each area of your budget, including entertainment, groceries, eating out, transportation, and so on. Make sure to add some form of fun to your budget, so you don’t get bored of budgeting and spend more than you make.
#10 Budgeting Shows You Exactly Where Your Money is Going
You are now the boss of your money. Make sure to tell it where you want it to go. Change your money mindset to be the boss instead of a slave to debt. You can start by using these amazing budget printables in my shop and keeping a binder of all of your personal finances.
Why is Budgeting Important Final Thoughts…
This post detailed the main reasons budgeting is important. If you are unsure whether or not you need a budget, this post makes it clear it will help you plan ahead and eliminate money stress. Using a budget will help you stay on track with savings and move you closer to reaching your financial goals.
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