Why We Budget
Creating and following a budget brings financial stability into your household. Having a personal budget allows you to move from being ruled by your spending to being ruled by your goals. Without a budget you are drifting aimlessly, wasting money on purchases you probably don’t need and feeling resentful because you have to do without something you really want. Saving money gets pushed down the list, since you don’t have anything left over to save anyway.
Having a budget solves all these problems. Budgeting is about learning:
- how much money you have,
- where it goes,
- how best to spend it,
- how to save it.
6 Reasons Why You Need A Budget
Did you know that the average Canadian expects to spend almost $4,000 a year on impulse? If that’s not reason enough to have a budget, here are 6 more benefits of having a well thought out spending and savings plan:
Preparing a budget reveals your spending patterns. Just the act of preparing a budget provides value. By reviewing your old bank statements, credit card bills and store receipts, you can see exactly where your money is going every month. Once you know where your money is going you can create a plan to control it.
A budget forces you to establish goals and priorities. It help you take a good look at what you really want to accomplish. You set individual, achievable goals to pay down debt and save money. If you spend money without a purpose in mind, you’re more likely to waste money and you won’t have enough to buy a car, take a vacation or build an emergency fund.
A budget sets a framework to control spending. Life is about making decisions. Do you need that expensive dress & new shoes or can you cut back? A good budget provides you with a structure to help you make wise choices about where you want to spend your money. It’s not about ‘doing without’ it’s about working towards what you really want.
You will learn to replace bad spending habits with good ones. A budget gives you the tools you need to stay on target. Using credit wisely or better yet, paying by cash, and sticking to a shopping list are all new skills you will learn to use every day. Over time these lessons become more habit than chore, improving your money management prowess.
Following a budget improves your financial security. By changing your focus from behaving like a spender to being a focused budgeter you gain the financial freedom to achieve what you want. Once your spending is under control you can focus on debt reduction and then on building your savings. A budget is the means by which you will accomplish your financial goals.
Best of all it reduces stress. Having a good budget will allow you to feel positive about working towards a better financial future. No more avoiding collection calls. Now you can work out a repayment plan that fits your budget needs. You will feel rewarded when you are able to pay cash you saved for that next big ticket item. Family differences over how to manage your money are dealt with openly and up front. A family budget, made with the cooperation of everyone involved, significantly reduces arguments about money.
These are just some of the reasons why budgeting is such a great financial tool. If you want to take advantage of these core benefits, it’s time to start budgeting your way out of money problems.