Budgets are useful for everyone, not just people who have problems with overspending. This is because a budget makes you aware of where your money is going, helps you plan for the future and emergencies, and improves your family relationships. With a budget, you are prepared to handle any unexpected financial challenges that come your way.
It Gives You Control of Where Your Money Goes
The most important reason you should budget your money is to create better spending habits. Creating a budget requires you to take an in-depth look at your finances and then make decisions that affect your future. This helps you spend less money and save more. You think twice about all the purchases you make to ensure they align with your budget, which eliminates binge spending and gives you better control of where your money goes.
Of course, having a budget doesn’t mean you can never buy nice things. It actually gives you the freedom to afford what you want because you save in other areas. For instance, you can buy a nice car when shopping at BMW Rockville instead of having to buy a junker at some other car dealership when your budget is working properly.
It Keeps You Focused on Your Long-Term Financial Goals (Retirement)
Another important reason to budget is to reach your long-term financial goals, particularly retirement. Everyone has different goals about their financial future, but having a budget helps you actually reach those goals. According to Employee Benefit Research Institute, only 14 percent of Americans are confident they can retire comfortably. This is partially because of concerns over social security, but it is also because they are not budgeting enough money for retirement.
It Helps You Save Money for Emergencies
Emergencies are another reason you should budget your money — they happen to everyone. It is highly unlikely that you’ll go through life without your car breaking down, losing your job, having medical expenses, or facing some other sort of financial emergency. When you have a budget, you are able to plan for emergencies, which reduces your stress when they do happen.
It’s a good idea to save at least three months’ worth of income to make it through financial emergencies. Budgets allow you to continue to contribute to emergency funds so that they are there when you need them.
It Improves Family Relationships
According to Jeffrey Dew at Utah State University, couples who disagree about finances weekly or more are 30 percent more likely to get a divorce than couples who disagree about finances a few times per month. So, having a budget reduces arguments about finances, which improves your relationship with your spouse. Additionally, when children understand the family budget, they cause less stress on the family.
Having a budget helps you in so many ways. The most important is that you can plan for the unexpected, which reduces stress during emergencies. What other reasons are there for budgeting? Share your suggestions.