10 Reasons Why You Need a Budget

You’ve probably heard it a million times – You need a budget. And I know what you’re thinking: If I have a good job and pay all my bills on time, then it shouldn’t be necessary for me to track all of my expenses and review every little purchase I make, right?

Unfortunately, nothing could be further from the truth. No matter who you are and how much you earn, your finances will always do better once you’ve put a plan behind them. And the earlier you start doing this by using a budget and developing good money habits, the more that it can benefit you throughout your lifetime.

Here are ten solid reasons why you need to budget your money and how it can help you in the long run.

1. It Will Help You Obey the Golden Rule of Personal Finance

When it comes to managing your household finances, there’s one simple rule that everyone must follow: Expenses cannot be greater than income. Even people who are rich and famous have found this out the hard way.

Take actor Johnny Depp for example. You’d think that a guy with all of that “Pirates of the Caribbean” money would have zero money problems. But as it turns out, even Captain Jack Sparrow got himself into a financial mess due to bad business dealings and compulsory spending. According to an interview with Rolling Stone, it ultimately led to him lose almost $650 million of his net worth.

This just goes to show you that no matter who you are or how much money you make, you can’t escape the golden rule of personal finance. Use a budget to ensure that your expenses are below your income, and you’ll be sure to avoid going down this road.

2. Every Dollar Will Have a Purpose

Like it or not, every dollar you earn will go towards something. The problem is that unless you decide what that “something” is upfront, then it will eventually just slip through your fingers with you ever even realizing it.

Don’t be someone who earns five or six figures per year and then has absolutely nothing to show for it in the future. Starting today, make a conscious effort to assign your dollars towards the things that are important to you, and let your budget be the tool that helps you to organize this.

3. You Won’t Spend Money That You Don’t Have

Have you ever tried to estimate how much money you’ve spent for the month only to get your credit card bill and find out that it was way more than you thought? We’ve all done this, and it’s because the grand majority of us are terrible at guessing when it comes to our finances.

That’s why it’s best to stick to the facts, and a budget is going to help you to do this. Because you’ll be working with hard numbers, there’s no guesswork or question about how much money you’ve actually spent (or plan to spend). Ultimately, that’s going to help you to be more accurate and do a much better job of staying on track.

4. You’ll Discover Two Extra Paychecks Per Year

If you get paid every two weeks, then something you’ll find out once you start budgeting is that there will be at least two “three-paycheck” months per year. This is because if you get 26 paychecks annually, two paychecks per month are only 24 paychecks, and so that means two more that have to get distributed somewhere.

The good news is that if you realize this and plan ahead for them in your budget, then you can almost treat those two additional paychecks like extra money. You could put them towards paying down debt, contributing to your retirement savings, or some other helpful goal.

5. It Will Force You to Be Honest With Yourself

Making a budget is a little like standing in front of the mirror naked. There’s no place to run and hide, and what you see is what you get.

Although this can feel a little blunt, it’s a necessary step that some people need to take to accept the reality of their situation. By seeing the numbers all laid out in black and white in their budget, it can serve as the wake-up call that’s needed to motivate you to change your spending habits.

6. You’ll Gain Traction with Your Long-Term Goals

Sometimes life forces us to put the things we know we should be saving for (like a new home or retirement) on the backburner. But when you use a budget, you can finally give these goals the attention that they deserve.

The best kinds of budgets are the ones where you prioritize your money towards the things that actually matter to you instead of spending it on those that don’t. Cut out any unnecessary spending so that you can work these into your budget, and you’ll see your chances of achieving these goals rise dramatically.

7. You’ll Be Ready for Emergencies

Like it or not, bad stuff happens. Your washing machine will stop working, the car will start making a funny noise, your roof will start leaking, etc. It’s not a question of “if”, but “when” followed by “how much?”

However, if you budget a portion of your money into an emergency fund, then you’ll be much better prepared to handle these types of situations. Even if it’s something small like fifty dollars per paycheck, over time that fund will build, and you’ll be ready to handle whatever comes your way.

8. You’ll Develop Better Money Habits

Budgeting is not only good for your finances on paper, but also in practice too. Because you’ll be thinking more about your transactions, and that means you’ll be better informed as well as prepared to make the right decisions without hesitation.

9. The Holidays Will Be Less Scary

Special occasions like birthdays, anniversaries, and Christmas are supposed to be times of celebration. But for many people, these events invoke feelings of anxiety over the bills and expenses that follow shortly.

By planning for special occasions ahead of time with your budget, you won’t be caught off guard. You’ll recognize that these events are coming up and already have money allocated to enjoy them. That means you can worry less and enjoy them more as you’re supposed to.

10. You’ll Put Yourself In Control

There’s an old saying when it comes to money that if you don’t control your money, money will control you.

If for no other reason, start using a budget so that you’ll be the one calling the shots. It will be easier to keep lifestyle creep at bay and prevent yourself from becoming a slave to debt.

By committing to prioritize your financial goals, you’ll spend less on the things you don’t need as your handling of money gets better with each month that passes. Not only will you be putting yourself and your family first, but you’ll also be using your money to accomplish exactly what it should be used for – to live your best life.

If you’d like to get started creating your first budget, then give Buxfer Plus a try. You’ll be able to add as many accounts and rules as you like, and your transactions will automatically sync without any action from you. Find out more about Buxfer here.

Image credit: Pexels

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