Any financial expert worth his weight in gold will tell you that planning a budget is a good idea. But have you ever wondered what the true benefits of budgeting are?
Budget planning is one of the most effective money management tools at your disposal but it does take some time, effort and of course, self-control.
While it can be somewhat demanding, proper planning is an important course of action to take in securing a comfortable future.
No matter your current financial situation, implementing a simple budget right now will do wonders for your bank account down the line.
Here are some reasons why planning a budget is totally worth it.
In order to see success, it’s incredibly useful to start setting goals.
For a good place to start, the goals you set for yourself should be:
• Written down
One of the best and most motivating reasons to start planning a budget is for the achievement of goals, whether short or long-term.
With a good plan, you can prioritize money for things such as relieving debt, making a down payment on a home or kick-starting your own business.
Many people decide to use loans for these types of goals, which of course have to be paid back. While this can work for some, there are many things to consider before taking out a loan. If you instead budget properly, you can achieve goals without worrying about paying anyone back.
Another highly motivating reason to keep a budget is for wealth accumulation. In other words, being wise with your money today so that you can have more financial freedom in the future.
Setting aside a certain amount of money every paycheck can help you profit greatly in the future. Budgeting will allow you to make smarter investments, eventually increasing your total income and by extension, your overall happiness.
Having a budget can also reveal excessive spending habits and help you phase them out, which is explained further down.
Being prepared for emergencies
Life tends to throw us some curveballs and it’s better to be prepared than risk being struck upside the head by them.
Suddenly being laid off from work, unexpected health issues or deaths in the family can easily put you in financial disorder.
If, however, you have an emergency fund for these situations you will be thanking yourself because the last thing you need is to struggle with money while facing a possible crisis.
You don’t even need to put away a huge chunk of cash for emergencies, as little as 20$ a week can make for a good emergency fund.
Eliminating wasteful expenses
Once you begin to track your expenses, you will surely start to identify areas in which you spend more than you have to.
These revelations can save you a significant amount of money in the long-run without drastically changing your way of life.
Wasteful expenses amount to putting your earnings in someone else’s pocket instead of your own. When you impulsively buy something useless or unnecessary, the trade-off is real long-term value for short-term pleasure and it is almost never worth it.
In addition to all the above stated reasons, one should not ignore the benefits of budgeting on stress and anxiety. People tend to be much happier when they don’t have to worry about financial issues all the time.
Start planning your budget today and you can achieve your goals, build wealth, be prepared for an emergency and do away with wasteful expenses. While it may not be easy at first, it will pay off in spades in the long-run.
About The Author
This is a guest post by Matthieu Dalant, a French-Canadian blogger based out of the beautiful city of Montreal in Quebec. His topics of interest include everything from business growth to tech trends and futurology.