Almost 70% of Americans don’t have a detailed household budget according to a Gallup study. However, there are so many reasons why you should make a budget if you want to improve your financial situation. In this article, I’ll give you 10 reasons why you should have a budget
Reasons Why You Should Make A Budget
You Will Always Have Enough Money To Pay Your Bills
One of the biggest reasons why you should make a budget is so you will always have enough money to pay your bills. So many people spend money they don’t have and live above their means.
However, if you create and stick to a budget, you know you have enough money to pay your bills. This is because you’re aware of exactly how much money you earn, and how much you can afford to spend every month. Therefore, you never have to worry about how you’re going to cover your bills this month.
It Reduces Stress And Gives You Financial Freedom
Having a budget will reduce stress because you no longer have to worry about how you’re going to pay your bills. A spending plan allows you to have control over your money and gives you financial freedom. You’ll be able to buy the things you REALLY want because you’re no longer wasting money on things that don’t matter.
Many people believe having a budget is very restrictive—but it’s the total opposite. Budgeting is not about eliminating the fun in your life.
Freely give and take from your different budget categories so you’re spending money on things you enjoy. For example, maybe you decide to spend less on clothes so you can enjoy going out to dinner with your friends. As long as you are putting some money towards savings and your financial goals, you shouldn’t feel bad about the ways you spend your money.
It Helps You Achieve Your Financial Goals
We all have goals in life, and having a budget is a plan for your money. By having a plan for your money, it helps you prioritize your spending. This ensures that you’re working towards your financial goals because a budget forces you to keep track of your money and your progress.
Stops The Living Paycheck To Paycheck Cycle
One of the main reasons why you should make a budget is so you can break the living paycheck to paycheck cycle. Having a budget can keep you from overspending or wondering where your money went.
Making a budget will help you see where you may be able to free up some spare cash. Setting aside that extra money will help eliminate that living paycheck to paycheck cycle.
A budget also allows you to have a solid plan and helps you prepare for the future. When you prepare for the future, you’re in control of your money instead of your money controlling you.
It Helps You Get Out Of Debt (And Stay Out Of Debt)
Having a budget will tell you if you’re living within your means. In the day and age of credit cards, it’s so hard to tell when you’re overspending. Therefore, it’s so easy to get deeper and deeper into debt. However, a budget will help you stay out of debt because you’re aware of your spending.
A budget will also help you get out of debt because you know how much you can spend every month—which usually leads to better choices. You may decide to cut back on your spending and free up more money. You can then put that extra money towards your debt.
Use this FREE Debt Tracker to keep track of your debt repayment plan.
It Helps You Save More Money
A budget can help you save more money for your future in so many ways. First, you can save more money because people who have a budget tend to spend less. When you spend less, you can put extra money towards your savings or investment account every month.
Second, having a spending plan will prevent you from ever having to dip into your savings account. This is because you will always plan for your expenses in advance.
As you do this, you will start to see your savings grow and build wealth over time.
Prepares You For Emergencies
One of the top reasons why you should make a budget is so you can be prepared if an emergency happens. There will ALWAYS be an emergency—that’s just life. You (or someone you love) may get sick, injured, or laid off. Or maybe your car dies, you need a new roof on your house, or you have to fix an appliance.
This is exactly why you need an emergency fund. This money will make sure you can get through the tough times when they arrive.
Having a budget will allow you to save more money that you can put towards your emergency fund.
The size of your emergency fund depends on your personal situation. I suggest an emergency fund that is at least three to six months’ worth of living expenses. When I say “living expenses” I mean only necessities, such as rent and groceries. I don’t mean shopping, entertainment, dining out, or vacations.
- Related Article: How To Build An Emergency Fund
It Helps Change Your Mindset Towards Money
Much of your financial journey is emotional. It has more to do with your mindset than numbers. Most of the time, we spend based on emotions and not logic. We buy things because it makes us feel good.
However, when you have a budget, you become more logical and intentional with your spending. When you’re intentional with your spending, you make better decisions with your money and achieve your financial goals faster.
It Reveals Bad Spending Habits
Having a budget forces you to pay attention to the money your spending. If you regularly track your spending, you will start to see your spending habits. Therefore, you may start to notice the areas you spend more than you should. Budgeting allows you to analyze your spending and sheds light on those bad spending habits.
Use this FREE DailyExpense Tracker to stay on top of your spending habits.
It Helps Build Better Habits With Money
Finally, one of the most important reasons why you should make a budget is so you can build better habits with money. Once you’re aware of those bad spending habits, you can make a change and focus on achieving your financial goals.
Having a budget can help you become more responsible with your money. After you work so hard to get out of debt and build up your savings, the last thing you’re going to want to do is go back to your old bad money habits.
If you haven’t made a budget yet, don’t wait one more day! The sooner you establish your budget, the sooner you can get all the benefits I’ve laid out in this article. If you need help making a budget, start with this FREE Monthly Budget Printable. It will help make creating a budget quick and easy.
- How I Use My Monthly and Yearly Household Budget Spreadsheet
- Budget Organization Tools: The Ultimate Personal Finance Binder
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