Because it is hard work!
Seriously, budgeting, or planning your income and spending, requires that you look at your life, your priorities and your values. Good budgeting takes introspection and most of us don’t want to spend a lot of time looking inside ourselves. But like anything challenging, the rewards are priceless.
- Budgeting gives you peace of mind. Imagine not worry or fretting about money! A good plan sets expectations. For example, when you plan a trip, you know where you are going, when you are going and how you will get there, which means there is no need to worry. You simply follow your plan and arrive at your destination. Budgeting works exactly the same way. By planning for your income and expenses you know what you can spend today, what you need to save for tomorrow and how to create a worry free life.
- Budgeting makes emergencies easier to handle. Life always gives us unexpected plot twists. A good budget allows for an emergency fund. An emergency fund is typically a savings account that has enough cash for 3 or more months of spending. Having this cushion to fall on when times get tough means you and your family can deal with the plot twist and move on QUICKLY.
- Budgeting gives you freedom. A good budget includes a category of “free money.” This money is over and above your emergency fund, retirement savings, mortgage, insurance and utilities and the like. Free money is money that you can use to treat yourself to a spa day or a weekend of golf with friends or you can save it for an even bigger splurge down the road. For budgeting to work, it has to give us wiggle room and free money does that.
- Budgeting keeps you out of debt. By planning your spending, and saving for big-ticket items like new tires, home repairs and vacations you are much less likely to find yourself with a credit card balance you cannot pay. Nothing drags your life energy like credit card debt. Get out and stay out of debt using a budget.
- Budgeting lowers conflict in your relationship with your partner, spouse and with yourself! By having the discussions now about what is important, what you are saving for, and where you are prioritizing your resources, you avoid the pain of money arguments and conflict in the future. Yes, maybe some of this will come up as you budget. Just breath, keep focusing on what is really important, be prepared to compromise as needed and you will get through it.
Remember, there is no one right way to budget. Just like there are many ways to plan a trip and many ways to do a strategic plan there are many ways to budget. Find one that is right for you and stick to it. You will be glad you did.
Share your best budgeting tips and benefits by commenting below!