The beginning of a new year is always a financial strain for many of us, particularly if we’ve just spent a fortune on the holiday season. January often marks the time where people make their resolutions for the year and many choose to improve their money management. Living from paycheck to paycheck is a reality for many people although it is possible to still enjoy the finer things of life with some careful budgeting.
Here we take a look at the many benefits budgeting can bring to your life. It is the most effective tool for managing your money and yet many people don’t put the time or effort into it. In many cases, people believe that setting a budget means they can’t enjoy any luxuries but this is far from the truth. Careful money management can free more of your income so you can enjoy more disposable cash in fulfilling ways.
There are many benefits of improving your personal finances with budgeting and here we show you ten of them1.
1)Budgeting Provides You 100% Control over Your Money
If you are not in control of your finances, then there’s every chance your finances are controlling you. Limiting your life in small ways by feeling that you can’t afford to do what you want to do is often unnecessary. When you plan a budget, it gives you absolute control over your money so that if there are any unexpected expenses, you’re prepared.
2) Let’s You Track Your Financial Goals
Another benefit of budgeting is that you can avoid spending money on unnecessary fees, services or goods that are preventing you from reaching your financial goals. Say for example you want to buy a house and yet you always forget to pay your credit card bill on time which cuts into your savings. Planning a more careful strategy means that you can put your savings to one side when you’ve been paid and know you have enough left to pay for the practical things. Consolidating or reviewing your borrowing is also an excellent way of helping you achieve your financial goals and it is worth visiting LoanReviewHq.com to find out more.
3) Budgeting Will Open Your Eyes
Budgeting is invaluable in making you more aware of where your money comes from and where it is being spent every month. Listing all the regular payments you make can sometimes highlight things you are paying for that you no longer receive. Old subscriptions or debits you’ve forgotten to cancel can be costly and budgeting can bring those unnecessary expenses to your attention to save you money.
4) Will Help Organize Your Spending
When you start to budget, you initially break down all the expenses you have each month including things like cable TV, mortgage or car repayments, gym memberships and any financing you have. Drawing everything up into a schedule so that you can see clearly when payments are due will help you save money by ensuring they are covered when taken from your bank. Late payment charges can be considerable depending on the type of financing and this could be eating into your disposable income.
5) Will Help Create a Cushion for Unexpected Expenses
It’s always reassuring to have enough money tucked away to deal with any unexpected expenses. We can’t see into the future and should you need to have car repairs, make a trip to the hospital or have an issue with your plumbing, having money set aside for emergencies gives you peace of mind. You don’t want to be in a situation where you can’t cover the costs of something really urgent and a good budget strategy will prevent this from happening.
6) Budgeting Makes Talking About Finances Much Easier
Talking about finances with loved ones and partners can often cause stress in relationships. When you have a budget drawn up it makes it clear for everyone to see what the financial facts are. It takes away the pressure when sitting down and talking about finances when everything is in black and white.
7) Having a Budget Let’s You Save a “Safety Net”
As mentioned above, it is impossible to see into the future although it is a sad fact that many people lose their jobs. Suddenly facing unemployment is a big financial issue for most people and losing an income is not something many households can cope with. Although it is obviously better to think positively, careful budgeting should factor in all worse case scenarios. Even if you manage to save one month’s worth of expenses, it will stand you in good stead if you suddenly find yourself without a job.
8) Allows You to Pay Down Debt Quickly
There are plenty of ways for us to get in debt. Mortgages, student loans and vehicle finance are the most common ways people get into debt. It’s always important to understand the mechanics of any borrowing you have so that you know exactly what rate you’re paying and if it’s likely to go up in the future. When taking out financing, check that the repayments are affordable even with an interest rate hike so that you don’t get any nasty surprises further down the line.
9) Budgeting Helps You Invest
When you budget carefully, you free up more disposable income which allows you to invest if you wish. Perhaps you need to save for a college fund, a child’s wedding or your retirement. It’s never too soon to start making financial plans for life’s big events and it can save you bundles in the future. You can also get your money to work for you by investing although it’s always advisable to get professional advice before you do so.
10) Last, but Not Least it allows you to Live Life Better
When you are in control of your personal finances, it has a hugely positive impact on your life. Perhaps the most significant benefit is that you have more money to spend on you when you are careful with your routine expenses. Although it may seem hard to believe, you can make extremely worthwhile savings by taking a closer look at your income and expenditure. Making small adjustments gives you much more freedom to spend your money on things you and your family enjoy.