12 Life-Changing Benefits of Budgeting Your Money

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So many of us bloggers talk about budgeting like it’s the bee’s knees. But if you’ve never had a budget, you’re probably wondering what are the benefits of budgeting and how will they apply to your life.

Now, I’m not naturally frugal, I love to spend money.

Yet, I also managed to get myself out of $30,000 worth of debt and pay off my home in five years. I’ve travelled to 40 countries and brought my kids along to 20 of them.

There were two main reasons I was able to achieve those huge milestones.

  • I worked hard to earn extra money where ever possible. I talk about that a lot here.
  • I stuck to a budget and that’s what we are talking about today.

Why is Budgeting Important

There are many advantages of budgeting, but for me, the most important is that a budget lets me have the life I want, right now. Keep reading to discover more.

1. A budget gives you power over your money

So many of us feel like we are slaves to the bills and endless obligations.

If you aren’t budgeting, you might end up taking on debt to make ends meet or having nothing left at the end of the week.

Putting a budget in place can help you get in front of your bills and know what to expect and when

2. A budget can flex with your life

If you think having a budget will restrict you, think again. A budget is a living thing, you can sit down and reassess as life changes happen.

As an example, right now, I’m facing increased grocery expenses as my boys get bigger. I’ve been able to take $50 from my utility fund by swapping to a cheaper provider and add it to my grocery fund.

Next year when we travel for a year, we will have a completely different budget. The point is that your budget can change with your life. You are the boss of your budget, not the other way round.

3. Help you clear debt

One of the biggest advantages of budgeting is that it shows you where there is extra money and where you could make savings.

This is how you speed up debt repayment. If you can find an extra $10 or $20 a month to put towards debt repayment, you end up paying less interest and getting out of debt faster.

“I wish I was debt-free so I could ________”

We’ve all said it. And now that I live debt free, I gotta tell ya, it was worth the sacrifice. That $300 a month I used to spend on a car payment now goes into a travel savings account. The $900 a month mortgage payment? Invested for the future. 

4. A budget allows for more fun

How many times have you turned down a night out with friends because you couldn’t afford it? By allowing for fun money (or blow money as we call it) in your budget, you won’t need to say “I can’t afford it” again.

5. Your budget can reflect your life

Love knitting? Travel? Baking with expensive ingredients? No problem. Make each of your passions a line item in your budget and set money aside for it.

My husband and I have a travel fund which we obsessively add money to.

It’s our passion and we would not enjoy our life without frequent travel, so we prioritise that category of our budget over a car payment or a larger house.

6. Shows self-control.

When I started to invest in real estate, I had to prove to my bank that I was a safe bet for a home loan.

As they combed through my bank statements for three months worth of transactions, they would have seen controlled spending and amounts allocated to savings, bills and paying back debt.

My husband and I have never been super-high earners, but we’ve always been approved for credit when we apply. I think using a budget has a big part to play in that.

7. Makes money conversations easier

If you’re in a couple or family, it can be difficult to talk about money. By sitting down as a family and writing a budget together, you set aside time to talk about your financial goals and concerns, as well as solidify a plan to move forward.

Heck, do it every month if you need to.

Getting everybody involved in making and sticking to a budget will help you move towards your financial goals in unison.

(I also highly recommend each adult have a blow money category. We do $100/month each to spend as we like, no questions).

8. Turn wishes into real life

Instead of wishing for things to happen, you can make them happen by including your life dreams into your budget.

You can add as many budget categories as you want – including travel, early retirement fund, 40th birthday celebration etc etc. There is nothing you can’t include in your budget.

Related: The Ultimate List of 130 Budget Categories to Include in Your Budget

9. Stops you living paycheck to paycheck

Once you start budgeting and planning how and where your money is spent, you can’t help but optimize your expenses.

You’ll naturally reduce spending on frivolous expenses and can start to save an emergency fund so you don’t run out of money before payday.

10. Help you break bad money habits

If there is one answer to the question ‘Why Budget’ it’s this: a budget makes decision-making easy.

When your money comes in, your budget tells you where it needs to go. You can (and should) put some aside for long-term savings, stash some for a rainy day and pay any bills that are due.

One of the biggest disadvantages of not budgeting is that you are always reacting to situations. You’re always forgetting about bills or scrounging to find bus money on a Monday.

Once you create a budget that includes everything you need, you get ahead of your money and make it easier to succeed.

11. Saves time

Once your budget is setup and running correctly, it should simply be a case of checking over your bank accounts to make sure all your automatic transfers have gone where they need to go.

You won’t need to spend time on the phone begging for a payment extension, or trying to figure out what an expense on your credit card was for.

(Be warned though, you might spend more time getting educated about money management and saving money – but that’s not really a bad thing)

12. Saves you money

You’ll no longer need to pay overdraft fees or late payment penalties. Your payments will be made on time because you have a budget.

I hope I’ve convinced you about the awesome benefits of budgeting and why you need to start a budget if your money situation isn’t where you’d like it to be.

For more information check out the following posts:

Do you have a budget? If not, why not?

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When it comes to money management, the benefits of budgeting can not be understated. If the idea of budgeting doesn't excite you, prepare to be amazed (can you tell I love budgets?!?!)

Emma

Emma

Hi, I'm Emma. I set about gaining financial freedom back in 2012 when my son was born. I've been hustling to pay down debt, save money and build online and passive income streams ever since. You can find out more here.

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