We have all heard that it is nearly impossible to succeed financially without having a spending plan. On some level I think we all know we ought to be doing a budget, but studies have shown that not many people actually do one. Certainly, a budget can help us achieve long-term success, but here are some benefits of budgeting that you may have never considered.
Really, at its core, creating a budget is really just about setting priorities. It’s about deciding purposefully ahead of time how you will spend your money. When you live on a budget you are making decisions about what is most important to you. I think one of the unexpected benefits of a budget is that it helps you clarify exactly what your priorities are. By making those intentional decisions about your spending you will look at how you use your money in a very different way.
Knowing where you stand
When you are living without a budget, you never are quite sure where you stand. When you go to dinner and a movie Friday night did you just spend the money you need to pay the electric bill? Hmm. You aren’t sure. If you have a spending plan that includes some entertainment money along with the money for the utility bills, that Friday night dinner will taste a lot better. One of my favorite budgeting methods is using the envelope system. We use envelopes for things like groceries, entertainment and clothing. When you are looking at that new outfit, envelopes make the decision easy. If there is money in the envelope you can buy the outfit with no guilt. If there is not enough money then you know you have to tell yourself no.
A sense of control
When you live on a budget it provides a sense of being in control. Even if money is tight and it’s a struggle to get by from week to week, there is something very empowering about having a plan. Purposefully telling your money were to go will give you a confidence that you will find surprising. When you feel like you are in control and are intentional about what you are doing, you will make much better decisions.
The most surprising benefit of budgeting
One reason many people refuse to live on a budget is because they feel like a budget will restrict them. If they have to follow a budget it will steal all their fun. The truth is just the opposite. Having a spending plan will actually allow you to have more fun spending. When you have set your priorities and have that sense of control because you know where you stand, you can spend and enjoy your spending. There are no worries. No feelings of guilt. No fear. There is a sense of freedom in having a plan. A budget will allow you to enjoy your spending in a way that you probably never expected.
What is standing in the way of you starting to budget this month?
Photo credit: LendingMemo (creative commons)