14 Wonderful Benefits of Budgeting Your Money

The Unexpected Benefits of Budgeting

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If you have been tuned into this blog for a while, you’ll know I am a HUGE fan of budgeting. Why you might ask? Well since you got me started, here is a list of some of the amazing benefits of budgeting! 

1. Save More Money

Do you know how much money you saved last month?

Do you know how much you spent on food, gas, clothes, random stuff you probably didn’t even need and already forgot about?

If you answered “no” to either of these questions, you are likely missing out on being able to save a TON more money than you are currently.

By simply beginning to track your expenses, it will be SO much easier to find the areas of your budget you can trim to put more money in your pocket for the things you really care about.

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2. Have Peace of Mind

Sometimes when people think of budgeting the first thing that comes to their mind is deprivation. That is honestly the exact opposite of how budgeting should feel!

If you have a budget, you can have peace of mind knowing that you have accounted for expenses and are planning for a better future.

Budgeting doesn’t mean NOT spending money. Instead, it just means that you can rest easy knowing you have made a plan.

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3. Plan and Prepare for the Future

If you know where your money is going and how much you do (or don’t) have left over every month, you can more easily plan for the future.

When you know what your monthly expenses will be, you are also able to pay yourself first by contributing to savings and not just adding whatever you have left over.

Say you decide you want to buy a house. You can look at your budget to determine exactly how much money you can save towards a down payment and calculate how long it will take you to get to your target down payment.

The same can go for any other major purchases or life changes. Want to have kids and be a stay at home parent? Budgeting now can help you determine what needs to be changed to make that happen.

Is it a goal of yours to stay debt free? Budgeting will help you determine how to pay cash for your next vehicle purchase.

You get the idea. 

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4. Stop Feeling Guilty for Spending Money

I am a huge saver by nature. There is definitely nothing wrong with that, and it has helped me get ahead financially. BUT, what is problematic sometimes is the guilt I feel for spending money!

If I make a purchase that isn’t “necessary” I justify the purchase over and over to myself or just feel bad for making it (even if it was a well thought out, planned, purchase).

With budgeting a specific amount of “spending” money each month, I can now make these kinds of purchases without feeling guilty for them. This has been a huge benefit of budgeting for me!

There is nothing wrong with doing something for yourself, and a budget can help you remember that.

Plus, if you budget for some discretionary spending, you are also less likely to go on an “I am deprived and emotional” spending spree that you really will regret later.

Although some people say to budget 20% of your take home pay for wants, I really feel like that is a bit overkill if you are paying off debt. I give myself $30 every month to go into my “discretionary purchases” account. Joel and I also spend between $50-100 on “fun” activities like dates.

This is more than enough for me, but you’ll have to decide for yourself what you will spend on “wants” in order to not feel deprived and give up.

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5. Don’t Get Caught off Guard by Expenses

Another advantage of budgeting is being financially prepared for every month.

When you budget for the month and make note of recurring yearly or semiyearly expenses (such as car insurance, Christmas presents, etc), you can start saving for those in advance.

By doing this you will be able to avoid going into debt simply because you forgot to plan ahead!

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6. Have a Safety Net

Another of the biggest benefits of budgeting is that it decreases the chances that you will be caught off guard in case of an emergency.

By determining ways to save more money, you can build up savings to help pay for unexpected expenses. Things like a car accident, major repair for your home, or a trip to the hospital can be devastating if you don’t prepare for them before you happen.

By budgeting, you can find ways to contribute extra money to building your emergency fund each month.

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Related Posts

How to Budget Like Your Life Depends on It

Amazing Tips on How to Save Money Easily

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7. Invest in Your Future

When you make your budget, it is important to factor in a monthly retirement contribution. Even if it can’t be much right now, the important thing is that you START!

By starting early you can take advantage of compounding interest to grow your small amount by hundreds of thousands of dollars by the time you retire.

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8. Know Where Your Money is Going

Budgeting makes it SO much easier to know where your money is going every month.  You may even discover you have automatic purchases or subscriptions for things you don’t even use being charged to your account every month.

Being organized will also help you keep track of your expenses. That way, you can easily tell if your costs go up dramatically and make changes as needed. This could even include negotiating with your utility companies.

The only way you would know this is because you are paying attention to your spending thanks to your budget.

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9. Strengthen Your Relationship

Monthly budgeting provides you with a GREAT time to talk with your partner about money.

By coming together at least monthly to work together on your budget, (and perhaps even more frequently if needed) you can make sure that you and your partner are on the same page financially.

Money problems are a HUGE cause of relationship problems, and unfortunately, it is often due to simply not talking about money enough.

In today’s culture, there is a taboo around talking about money. Which is just really ridiculous and ends up hurting everyone more than helping them.

So don’t be afraid to talk about money. Having a monthly budget meeting will allow you to have open, honest communication about money. By doing this, you can avoid problems before they even arise!

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10. Stay Focused on Your Goals

A monthly budget will help you remember, each and every month, what you are working for. It will help curb unnecessary spending so that you can stay focused on the big financial goals in your life.

If you are paying off debt, a budget is a MUST have. There is no way Joel and I could have crushed 60k of debt without one.

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11. You Direct Your Money, Not the Other Way Around

If you don’t have a budget, there is a very good chance that you aren’t in control of your finances. You may never feel like you can save or might be living paycheck to paycheck.

When you don’t have a plan for your spending, it has a tendency to disappear. On the other hand, if you have a well-defined monthly budget, you tell your money exactly where it is allowed to go.

Budgeting also allows you to “pay yourself first” so you are guaranteed to be able to save more money.

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12. Start Developing Better Money Habits

Now that you have a budget, you can use the information you have gathered through tracking to develop better habits.

We all have bad spending habits. But, when you have a budget, you are much more likely to be able to recognize and decrease those spending habits.

Getting rid of these bad habits will have huge long term benefits for you financially, and it all starts with budgeting.

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13. Pay Off Debt Faster

Budgeting ensures that you have a clear understanding of your monthly debt payments. You can also determine how much you are paying towards the principle vs. the interest every month.

Another one of the amazing benefits of budgeting is the extra money you “find” from your monthly paycheck. When you can cut expenses that are unnecessary, you will be able to redirect all that money towards paying down debt.

This, in turn, will help cut down on the interest you would otherwise have to pay over the life of the loan.

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14. Live a Better Life

The biggest benefit of budgeting is that it really does allow you to live a better life! Did you know that there is actually scientific research showing that budgeting can increase your happiness?

Getting rid of our student debt and contributing to retirement at such a young life has really allowed Joel and I to set ourselves up for a better future.

We are now able to make decisions based on what is important to us rather than solely based on money. And it is all thanks to budgeting!

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So You’re Ready to Start a Budget?

Check out this step by step guide for how to budget. All the tips and tricks you need to know are right here to help you get started in no time!