Budgeting. The idea can be a bit intimidating, especially if you’ve never done it before. Until just over a year ago, I’d never had a budget. My idea of budgeting was having a rough idea of how much was okay to spend, but then I’d still be surprised by the amount on the credit card bill at the end of the month. Not fun.
After I quit my job when I couldn’t afford to, I realized I needed to get a budget going, pronto. Which is why I taught myself a surefire way to make budgeting simple.
Still not sure why you should adopt a budget? Not only am I able to live out my dream of being a homemaker, but my husband and I are living on one income of $15,000 a year, debt-free—all because we implemented a budget.
And I have no doubt that it can transform your life too! Here are 7 reasons why you should be using a basic budget.
1. Really see how much money you have
A budget really is just a written record of the money you have coming in and going out. It’s that simple. And once you’ve got that information laid out in front of you, it’s much easier to decide how you want to handle it, and how to make your financial goals a reality.
Having a budget will help you see how much money you really have coming in. It’s become so common these days to have your paycheck directly deposited into your account. In fact, many companies require it. It’s an awesome convenience, but I have to admit that, when I was working, I was one of the remaining few they had to hunt down to get us to switch to direct deposit. I liked to see that paycheck I worked so hard for in my little paws!
But, believe it or not, I know some people who don’t even know how much their paycheck is! They just look at their account balance once a month. Then they wonder why it’s such a struggle to make ends meet.
But when you manage your money with a basic budget, you know exactly how much is coming in each month (or each pay period), and exactly where it’s coming from.
And just being aware of that is the first step in helping to cure overspending.
2. Realize how much you’re spending
Now I’m not gonna sit here and tell you that having a budget will automatically cut your spending. Your budget is the tool that can help you get your finances back on track, but how much you spend is still something you have to make a conscious decision about.
The good news is that having a budget in place is going to make it way harder to deny the numbers that are all laid out in black and white. If you truly take stock of your income, then you’re not gonna find it so easy to make excuses for your spending.
Also, taking stock of your spending allows you to see exactly where your money is going. Okay, I’m not a coffee drinker. I’m just not. I love the smell of coffee, but the taste is nasty not for me. But… I looove pizza. So we started just getting a pizza here or there, and then it became a habit to get one once a week.
But I didn’t realize how this was adding up until the end of the month. We’d spent $26 on pizzas! That’s a lot when you’re on a very small income. But if I hadn’t had a budget? Oye, I wouldn’t have even noticed how much it was adding up. Perfect example of why having a budget is so important for knowing where your money’s actually going.
3. See opportunities to make cuts and save more
Realizing where you’re spending is the first step in making a budget work for you. But once you recognize those black holes that are trying to suck you dry, you have to take charge and do something about it.
My whole pizza spending debacle… Just having a basic budget in place allowed me to see what was happening and make a change. So now, within our weekly allotted amount for grocery spending, we budget $6.50 of that for pizza.
It meant we had to make cuts in our grocery budget to be able to do it, but it allowed for my gooey cheesy pizza every Friday night. And that’s a compromise I’m willing to make!
Budgeting Bonus: We have a few leftover slices to munch on throughout the week, which helps offset the cuts we made.
4. Pay down debt
Okay, debt isn’t the most fun to talk about, but if you don’t face it, your quality of life, your financial goals, your future—all of that is going to suffer. Think of it as a challenge to see how much you can pay off per month, and your budget is the framework that’s going to allow it to happen!
Taking stock of what you owe—mortgage or rent, car loans, student loans, medical debt—is a simple first step, and a budget is the best tool for taking an honest look at these balances. Once you’ve gotten them logged in your budget, you can see the one area you want to focus on and decide how much you can put toward it each month.
If you start by taking these small steps, you’ll have your first debt paid off before you realize it! It’s amazing how you can make your money work for you in all sorts of ways when you implement a basic budget to sort it all out for you.
5. Save for the future
Whether it’s college for your kids, a new car in the next few years, or building an emergency fund, having a budget in place will help you organize your financial priorities. Even if you can only afford a few dollars toward these funds each month, those dollars will add up!
Saving for your future is sooo important. If you’re not already saving even a small portion of your income, then starting fresh with a basic budget is the perfect solution. And don’t worry, because it’s never too late to start saving!
After quitting my job, I knew we would never be able to save any money. We were barely scraping by. But I was wrong. I determined to save whatever amount we could, even if it was just $5 from every paycheck, and stick it in our savings account. And with a budget in place, you can do this too!
6. Accomplish your goals
If you’re not budgeting, then you really don’t have a plan for your money. (Ouch!) I’ll be honest, that realization was a bit painful for me. But deciding to create a budget was one of the best financial decisions I’ve ever made. There’s no way I’d be able to be a homemaker, run this blog, or take care of my senior Squishy Pug full-time without it.
Maybe your goal is to be able to stay home with your kids, work from home, save for a vacation, go back to school, start a college fund for your kids… or maybe a combination of these things. That’s what makes budgeting a real solution for your finances, because your budget is just what YOU create it to be!
Don’t think of a budget as a set of rules, but as steps that you’re taking to achieve your life goals. Whether it’s saving money on groceries or planning for that Hawaiian getaway, it all becomes a real possibility when you put goals in place by budgeting.
7. Become more responsible with your finances
Soooo…responsibility. Meh. But here’s the thing, life is full of responsibility whether we like it or not. And the only alternative is being irresponsible. And that is NOT what we’re about, am I right?
Being responsible is a wonderful thing, because that means you’re taking care of business. And when you’ve got the important, necessary stuff under control, that’s when you’re able to focus on the fun stuff!
Having a basic budget in place is the tool that offers freedom from late fees and overdrafts, from overspending and that ever-increasing balance on your credit card bills.
Okay, I’m going to admit something here. Before I started a budget, I never even had any idea how much we were paying for utilities each month. The bill could’ve said $45 or $150 and I never batted an eye either way.
But when our income dropped by nearly 60%, necessity became the mother of invention, and friend, I needed a budget! Now that I have one, I’m soooo much more aware of what things cost, what we’re spending, and exactly where our money is going. And that makes it much easier to find places to save and ways to cut costs!
The real solution
Managing your finances isn’t always easy, believe me, I know. I put off living on a budget for so long. I only started because I had no other choice and I needed to stretch every single penny. Now when I look back I could kick myself in the pants for all the money we spent without even realizing it.
But the good news is that you don’t have to keep missing out on reining in your spending and accomplishing your financial goals! Whether it’s cutting costs, saving for the future, or just overall becoming more responsible with your money, a basic budget is your surefire solution.
Not sure how to create a budget or where to start? Get my FREE Basic Budget Worksheet today when you sign up for my email newsletter below—it’s free!
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