Want more money? Ironically, you need to budget. It helps you plan for the future, makes life easier now, and stops you from sinking into debt.
What is a budget?
A budget is an essential part of your financial planning and management. At its most basic, it takes into account all your outgoings and income, ensures you allocate money as needed, and aren’t left short at the end of each pay check.
But a great budget it is so much more than that. It allows you to prioritise spending, so you only buy what you actually need. Budgets allow you to forecast your money over the months ahead, planning for big expenses like a rates bill, school uniforms, or Christmas. It gives you the tools to make and achieve your goals and dreams. It makes you save, so you have a buffer that protects you and your family from financial shocks.
Just like a business needs cashflow planning, so do families and individuals. If you want to have true financial freedom; you need to budget.
1. Budgeting helps you control your spending
Everyone has some bad money habits. Maybe you splurge on expensive things you really don’t need. You might crave a flat white every morning and nip out to the local café and guiltily pay $4 instead of utilising the free stuff in the smoko room. Whatever the bad habit, budgeting helps you manage your spending better.
If you’ve got goals in mind, a budget helps you see how small expenses add up and stop you from achieving them. Seeing your goals slip further away, one coffee and scone at a time, can be a great motivator.
2. Budgeting helps you set (and achieve) your goals in life
Whether it’s travel, a lush retirement, a pool, a boat, or maybe just being able to have your bills auto-pay, comfortable knowing there’s enough money to cover them, budgeting gets you there. Sitting down and truly thinking about what you want in your life, then making a budget to plan for it, helps you get there faster.
3. Budgeting can save your marriage
Most couples argue about money. But sitting down and preparing a budget together helps you both know exactly your financial situation and keeps you working together to achieve your goals.
No more arguments. Well, no more arguments about money.
4. Budgeting stops you from feeling overwhelmed
When all the bills come due at once, or if the fridge breaks down, or Christmas seems to happen a lot more than it should, it’s easy to feel overwhelmed. However, having a budget means you can minimise the stress. You’ve got savings, you’ve forecasted and planned for those upcoming bills, and there’s nothing to be worried about.
5. Budgeting stops you spending money you don’t have
There’s something really freeing about knowing exactly how much money you can spend. If you set your budget for $200 discretionary spending each week, that’s it. When you reach that limit, you’re done. This makes it easy to say no (to yourself, or the kids). We don’t have that money but let’s look at this next week.
6. Budgeting stops you buying things you don’t need
The kids reaaaalllly want that toy. (Note that word ‘want’). You think you ‘need’ a new saw (it’s easier to justify a ‘need’ isn’t it). But your budget says you can’t get either until next month. That’s great, because in the interim you’ll borrow your neighbour’s saw, and your kids will forget all about that toy they claimed would complete their life forever and move onto the next thing. A budget helps to slow your spending down so that you’re less likely to spend unnecessarily.
7. Budgeting gets you out of debt
Credit cards. Loans. Mortgages. Hire purchases. Buy now, pay later. Debt can be crippling, and it’s stressful. Having a budget helps you pay off those debts, and then keeps you from making more debt. If you know exactly what you can afford to spend, there’s no unplanned debt. No debt, no interest being paid to someone else, that money stays in your bank.
8. Budgeting means you’re prepared for emergencies
Life is full of disasters. Fridges break down. Car engine lights come on. Family members get sick. These things are 100% going to happen, and you need to be prepared for them. A budget that provides for these emergencies means you will have money set aside for them so that life’s speedbumps don’t derail you completely.
9. Budgeting saves you money
If you have goals, strategies, and plans for your money, you’ll find saving money is loads easier. For many people, saving is difficult. It can be tough to maintain some level of self-control and not buy things that give you short term or immediate pleasure. But budgeting helps you keep your eyes on the prize. It keeps you accountable. It keeps you from making those silly decisions, like buying the expensive cheese or being lured in by a new t-shirt.
10. Budgeting ensures a happy retirement
Part of any budgeting conversation includes retirement savings. That’s because you want to keep on living a life once you clock off from work; not just sitting at home eating two minute noodles, too scared to turn on a heater in case your electricity bill skyrockets. You need to make sure you have enough money to live a life that’s enjoyable. Budgeting helps to achieve that.
Budgeting gets you ahead
Truly, budgeting puts your finances on track, lets you know where you are, and propels you ahead. Done right, there’s no more hand-to-mouth, paycheque-to-paycheque living. There’s cash in the bank when you need it, a financial safety net for disasters, and plans for the things you want in life.
If this sounds like what you need, contact Sam Kodi. He can help you get your finances on track to build the healthy financial life you want.