7 Advantages of Using a Personal Budget

Still not convinced that you need a budget to organize your personal finances? I will give you 7 great reasons to prove to you that having a budget is absolutely the right thing to do, and hopefully at the end will convince you that having one is better than not having one at all.

At the end of the day, no one can force you to do anything with your money. It is your choice. But let us face it, just because it is our money doesn’t mean we know what to do with it. Sometimes, it helps to take the advise of others and try it out, it may just work out for us.  After all, I only started budgeting myself last 2 years or so, after having ignored the concept for much of my adult life.

1-See the big picture: with a budget, you can easily see what is coming in, what is going out and what is staying in your hand. When you have such financial information handy, you will be better able to make important decisions that will help you now and in the future.

2-Financial Freedom: Have more money to spend on all your needs.  With a budget, you will set an amount for every category, this way, you will never have to spend all your money on one thing and not have anything left for other things. A budget ensures everything stays within its boundary and not be impacted by what you are spending on other things. With no budget, for example, you can spend your entire paycheck on paying for something big and not have anything left for other items.

3-See problems and adjust: are you spending too much on eating out? are you paying lots of interest on your credit card debt? with a budget, you will be able to see problems such as these and be able to correct or adjust them.

4-Helps with your saving: you know what you are spending on and what is left for saving or vise versa. With no budget, there is no visual or mental restriction on you and what you can spend your money on, so you could end up with no money for your savings.

5-Eliminate your debt: when you create and plan your budget, you will set a special category for ‘debt.’ The amount you allocate to this category will depend on how big your debt is,how big your income is etc.  Nevertheless, to be able to dedicate a specific fixed amount from every paycheck that will go towards the paying off of your debt will mean that you will be consistent and not have to miss any payments or fall behind. Again, the idea is that a budget is like a map where the boundaries are clear and there is no risk of one taking over another. So you can keep paying your debt while still setting aside money for saving.

6-Serves as a mirror of your financial situation: by laying it all out in a budget, including your income, spending and money leftover for saving, you will be able to judge your situation and decide what needs to change. Is the money you are making not enough, and as a result, need a new better paying job? or are your spending out of control and you need to do something about it? A budget will help you see your current status and you can then decide what you need to change.  You never know, a simple budget could be your motivator to change careers to a better paying one.

7-Eliminate Stress: a budget will help you eliminate both your debt and the stress that comes with it. Think about it: a budget is like those ‘debt consolidation plans’ that you have likely been hearing a lot of lately. Only difference, with a budget, you pay down your debt without any concession or major sacrifices to creditors and banks etc. Not to mention, it could even save you from going in the path of declaring personal bankruptcy.

I hope these were enough reasons to convince you of the importance of having a budget. If you think creating and maintaining a budget is too much work, then you can start slow, maybe through envelope budgeting and then slowly evolve to full-fledged budgeting.

If you are still not convinced, let us know in the comments section.