Do you constantly wonder where your paycheck went? Are your expenses managing you instead of you managing them? Well, then you need to take control of your income and get on a budget.
Why Is a Budget Important?
A budget tells your money where to go instead of you wondering where it went.
In order to take control of your income, you need to know where your income is going. Building a budget is the fastest way to financial security and financial freedom.
Budgeting allows you to create a spending plan and prioritize your spending. It guarantees that you will always have enough money for the things you need and what’s important to you.
Following a budget will also help keep you out of debt by being intentional with your spending. And if you aren’t out of debt, a budget is the best tool to help you work your way out of it.
If you’re currently in debt, click here to get the steps to pay off your debt!
Below are five reasons why you need to budget:
1. Prevents Spending Money You Don’t Have
This is one of the biggest issues in America. People spend money that they simply do not have.
Which is one of the main reasons why credit card debt in America is so high!
Having a budget prevents you from needing a credit card because you only spend what you have.
With a budget, you know exactly how much your income is, how much you can spend each month, and how much you can put towards savings or your goals!
And if you’re a nerd like me, you can figure out what percentage of your income you’re living on.
Living on more than you make is no longer cool.
Actually, it was never cool. As Dave Ramsey says, “you need to start acting your wage!”.
2. Stops Bad Spending Habits
Once you get on a budget, you start to learn more about what your weaknesses are.
It really opens your eyes to all the silly things you spend money on.
Like the several impulsive Amazon purchases you make.
I’m calling myself out in that as well. I’m just as guilty.
However, because I’m on a budget, I get to reflect on my impulsive Amazon purchases once I run out of my miscellaneous fund for the month.
About that time, I look back on my Amazon account and thank God that I’m on a budget. Or else I’d probably bury myself in credit card debt with all my silly Amazon purchases.
It’s amazing how much you will learn about yourself and your spending habits when you get on a budget!
3. Helps Attack Your Budget Goals
Having a budget sets you up for success when it comes to accomplishing your goals.
After looking yourself in the mirror with your bad spending habits, you realize that you don’t want to go through life throwing your money away at every impulsive purchase.
You start to look at your long-term financial goals, and how quickly you can get there.
A budget is really amazing because when you know your numbers, you can easily calculate how fast you can get to whatever your long-term goal may be!
4. Prepares You for Emergencies
We all have had to deal with an unexpected financial surprise, unfortunately, some more than others.
Life is always going to be handing you the unexpected.
But having a budget can help recover from those hiccups much faster!
When you start budgeting, you need to line up your goals. And build your goals into your budget.
First, if you’re in debt, you need to build an emergency fund of $1,000. Then attack your debt.
Once you get out of non-mortgage debt, you need to build an emergency fund of 3-6 months of expenses.
And when the time comes, you will need to evaluate what a true emergency is.
If you have an unexpected expense come up that you can WORK into your budget, then you need to pause whatever goal you’re on and pay that unexpected expense. Rather than dig into your emergency fund.
If you have an unexpected expense that is urgent and necessary with no other way to work it into your budget, then you can use your emergency fund.
If you do end up using your emergency fund, be sure to build it back to the appropriate balance before getting back to your financial goals!
5. Brings Financial Peace
Financial freedom is the BEST feeling.
You can sleep better.
You can take back control.
You can basically do whatever you want!
It’s time to take control of your money instead of letting it control you. There are so many reasons to start a budget, but this is my favorite one.
I seriously wish I could share this feeling with everyone!
So, what are you waiting for? Start your budget today so that you can get closer to financial freedom!
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