4 Reasons You Cannot Afford To Skip Out on Your Budget

Budgeting gets such a bad rap these days. People think budgets are restrictive and rigid. They hear the word “budget” and immediately think of all the things you can’t do or buy if you’re on a budget. A budget is simply a spending plan for your money. According to a recent survey, 65% of Americans have no idea what they spent their money on last month. Here’s why you can’t afford to be in that number:

Budgets Put You in Control of Your Money

When you have a budget (or spending plan) in place, you tell your money where to go each month. You can prioritize your needs and plan for emergencies and the unexpected. Studies show that you are more likely to feel overwhelmed and stressed when you have no plan in place. There is no need to panic when you get a flat tire if you know you have the money to fix it when the time comes. 

It Helps You Ensure You Don’t Spend More Than You Earn

Rule #1 to building wealth: Spend less than you earn. It sounds so simple, yet for many, it’s the hardest to implement-- especially without a budget. Think about it, if you never make a genuine commitment to spending less than you earn, how will there ever be a time where you don’t have to work to have money to spend. You have to save and invest to get there. A budget allows you to be intentional about spending less to save and invest more. 

It Exposes Your Bad Spending Habits

Everyone has a bad spending habit (or two) they should address sooner rather than later. My bad habit is saying “it’s only $20” every other day on Amazon. It’s not the spending in itself, but it’s the fact that I rarely consider the impact of frequent, smaller purchases. A budget allows me to buy things off Amazon but set parameters around how much I spend in a month. It instantly made me more conscious of how quickly $20 here and there adds up. 

It Helps You Focus On Your Financial Goals

Financial independence, buying your first home or investment property, or taking a luxury vacation are all financial goals within reach if you play your cards right. Make a plan in your budget to account for the bigger things in your life. With a budget, you can make incremental progress towards something that may feel out of reach.