Having a personal budget is essential to gaining control of your personal finances. Budgeting doesn’t necessarily mean restriction; it frees up your money, so you know exactly what’s available to spend.
The top 10 benefits of personal budgeting:
- Gives you control. Developing your personal budget gives you control over your money. You’ll know how much cash you’ll have coming in and can make a plan for how to spend it.
- Focuses you on your money goals. Everyone should have goals for their money. Whether this is paying off debt, increasing your savings, or freeing up more cash to invest in your business, a personal budget will keep you focused on achieving these goals.
- Creates awareness of where your money goes. Have you ever looked at your personal drawings from your business and thought ‘we can’t possibly have spent that much money last year!’? You’re not alone. So many people really have no idea what they spend their money on.
- Builds better money habits. Reviewing your actual results against your budget each month will encourage you to think about your spending before you spend.
- Helps manage debt levels. You’ll be able to plan for unexpected expenses instead of obtaining debt to pay for emergencies. You’ll also be able to allocate more money to debt repayments to become debt free faster.
- Helps you achieve your wealth goals. Wealth goals are your long-term financial goals; saving for retirement or major life events. Because these are long-term, you need to start planning the steps to achieve your wealth goals now.
- Provides an early warning system. By regularly monitoring your spending, you’ll quickly identify upcoming costs and adjust your spending if required.
- Aids communication. Spending time developing your personal budget with your spouse will ensure you’re aligned with your spending plan.
- Provides you with more money. If you have a personal budget and stick to it, you’ll end up with more money at the end of the year than you would’ve had without a budget.
- Ultimately, it gives you a better life. Not only will you end up with more money, you’ll likely have less conflict and stress over money.
Personal budgeting doesn’t have to be a time-consuming process. Dedicating 1-2 hours a month to budgeting will result in a huge improvement; not only to your bank account, but to your stress levels too.
“A budget is telling your money where to go instead of wondering where it went.” - Dave Ramsay
Contact us if you need help developing your personal budget!