Out of all the steps you can take to get on the path to financial success, budgeting just might be the step that pays off the fastest. It’s no exaggeration to say that creating and sticking to a budget gives you five benefits you’ll notice immediately.
A Budget Puts You in Control of Your Money
The biggest advantage of a budget is that it puts you in control of your money as soon as you create it. If you don’t have a budget, you’ll have a hard time knowing what you’re spending on groceries, gas and electricity each month. That means that you’re letting what you spend control where your money goes each month, and that can lead to problems.
For instance, if you spend money on eating out whenever you feel like it, you might find you don’t have enough money to completely fill your car’s gas tank when you’re running low or get a new dress shirt for that upcoming interview. Worse, you might realize too late that you don’t have enough money in savings to pay for a tow truck if your car breaks down so you’ll have to put everything on your credit card and pay hundreds more in interest than you would have otherwise.
On the other hand, if you have a budget, you’ll know what money is available for you to spend each month and what you want to spend it on. You know you’ll have enough money for gas since you budgeted out enough money for one tank a week and you’ll know you have money set aside to deal with emergencies like car repairs, even if you are paying more in rent each month. You’ll be in control of your finances, and the peace of mind that gives you is priceless.
A Budget Stops Overspending
Another immediate advantage of budgets is that they stop you from overspending. While you might enjoy having a cup of coffee from your local coffee shop every weekday, but once you see you’re spending $115 a month on coffee, you might want to put that money to better use.
A Budget Helps Prioritize Spending
Realizing that you’re spending money on things you might not want to spend money on leads to the next advantage of budgeting: it can help you prioritize what you want to spend money on. When you see all the things you’re spending money on, not to mention what you have left over at the end of the month, you’re bound to start thinking about what you really want to spend your money on.
For instance, if you’d like to buy a new car you might look at your budget and realize if you spend less on a few weekly expenses like eating out for lunch you could substantially increase your new car fund.
A Budget Aids in Planning for Future Needs
Seeing where your money is going every month also gives you the ability to plan for the future. You can start to come up with S.M.A.R.T. financial goals and figure out how much time you’ll need to achieve them. You can also use the information in your budget to come up with hypothetical scenarios that will show you what happens if you want to increase or decrease spending in an area.
A Budget Lets you Stop Worrying About Your Finances
Finally, having a budget helps you stop worrying about your finances. If you’ve ever fretted about spending too much on a leisure item, you’re not alone. Wouldn’t it be nice to spend hundreds of dollars on something you’ve wanted for a while and not have to worry about whether or not you needed that money for something even more important?
When you budget you can safely spend as much as you’d planned on something you want, even if you’re spending over a thousand dollars. All you have to do is stick to your preplanned amounts, and you can be secure in the knowledge that you have enough money for all your needs.
Create a Budget and Stick With it at First Alliance Credit Union
A budget gives you several advantages that begin as soon as you create it. Seeing where your money is going lets you control how much you’re spending on what items, plan for the future and feel good about your choices.
You can get help with your budget when you become a member of First Alliance Credit Union today. You can also read more about creating your own budget in our Beginners Guide to Budgeting, at our resource center, as well as download the free budgeting calculator.