Whilst budgeting might seem boring and mundane, it’s really important because it helps to keep your finances healthy and on track. Budgeting helps you to forge good financial habits, good financial habits, avoiding debt and preventing overspending. Keep reading to learn more about why budgeting is important...
Having all of your bills included in a budget helps to ensure that you’ll pay them on time. Life can be busy but incurring late fees can be expensive! A budget shows you an overview of everything which needs to be paid and when so you shouldn’t fall behind with the bills.
If you’re already in debt, having a budget is a really important tool for managing it. Your budget can help you to identify income that can go towards paying off debt, once all your bills have been paid. If you stick to your budget, it’s unlikely that you’ll accumulate any further debt.
It’s recommended that everyone should have an emergency fund of at least three months money to cover living expenses. This gives you a bit of breathing space if unexpected expenses crop up or should the worse happen and you lose your income for a period.
If you struggle with impulse buying and keeping your spending under control, having a budget can help you prevent overspending. A budget is just a plan for what you’ll do with your money so it doesn’t restrict you from buying what you want. Using a budget just helps you to plan your spending so that you don’t spend more than you have!
Having a plan for your money is important if you have long-term financial goals. If you’ve got plans such as buying a house or perhaps you want to start budgeting for a wedding, having an overall budget will help to keep your finances on track and reach your goals quickly.
You might think we’re repeating ourselves but savings is not the same as an emergency fund! The two should be kept very separately. You might decide to save for something specific or simply save for a rainy day. Whatever the reason for saving, budgeting makes you more accountable for your spending, hence making it more likely that you’ll save money.
Remember what we said about accountability?! If you have an effective budget that includes all of your spending, it can help you to identify bad spending habits which may be holding you back. Perhaps you’re spending money on things you really don’t need such as unused subscriptions. Your budget can help you shine a light on unnecessary spending and redirect that money towards your financial goals.
Living pay check to pay check and/or wondering how you’re going to pay the bills can be really stressful and damaging to your mental health. Budgeting will give you and your finances structure so that you know what to expect and when. If you can eliminate nasty financial surprises, this will help to reduce stress.
If we’ve now convinced you as to why budgeting is so important, the next step is learning how to budget with Budget Pro.