Do I Really Need a Budget? Do Budgets Help?

Do I really need a budget?

That might be a question you ask yourself if you don’t like to budget or don’t know how. But if you are like so many people you need a budget if….

Do I really Need a Budget?

You do if you…

Live paycheck to paycheck

If you have little or no emergency savings (less than $1000 saved up)

You have a little saved for retirement or no retirement savings at all

You carry a balance on your credit cards

If you meet any of these criteria above, you need to make a budget because you aren’t saving enough and you are spending too much. The only way to get control of your money is to tell it where to go.

You tell your money where to go by setting up a budget and sticking to it. When you set up a budget you can save money, stop living paycheck to paycheck and pay off your credit cards.

Even if you don’t meet the criteria above keep on reading to see the benefits of a budget and why we still budget even though we are debt free.

Why Do You Need Budget?

A budget can help you no matter whether you are rich, poor or somewhere in between. The thing is, if you have no idea where your cash is going, it will go and not to the most important things.

You need a budget to…

Track your spending, to keep it in line and to make sure you have enough money for the important things. Not just things.

You need to have a budget to make sure you put enough away for a rainy day or a bad day when something breaks. You don’t want to have to be financing emergencies on credit.

You need to a budget to get control of your money. Because if you are like the average person who doesn’t have a budget, you’ll overspend and not have enough to make it to the end of the month.

Benefits of Having a Budget Every Month

1. Tell Your Money Where to Go

I’ve never regretted having a budget, even during our lean money times when our budget was really tight.

It was hard to look at those numbers on paper but looking at those numbers and thinking about them helped to keep us on track.

We knew how much we had to spend and how much we had to pay off debt and how much for every item.

I’m not saying it’s easy to stick to a budget when money is tight. If you don’t have a budget, it’s impossible to stay on track with your finances if you don’t have a lot to work with.

Have trouble overspending on everyday things? Use cash instead find out how to get started with a cash envelope system.

2. Pay Off Debt and Stay Out of Debt

For every penny you pay off you are saving money on interest. That interest can really add up so the faster you can get out of debt the better.

Having a plan (or a budget) can help you do just that, get out of debt for good.

Our family got into debt when we were making good money, more money than we really needed. We had a surplus, but we still got into debt. Why was that? Because we didn’t have a budget.

We spent money where and when we liked. We didn’t track it and so we ended up in debt. Being in debt is not a good place to be.

It was easy to get into debt when using credit cards. You might wonder how that debt builds up. I found an article on Nerdwallet that broke it down.

What Causes People to End Up in Debt (according to Nerdwallet)

41% is Unnecessary Purchases or Spending more than they can Afford
33% from (Non Medical) Emergency Services

Both items above, that are the biggest reasons people are in debt, could be helped by having a budget to help keep you from overspending. And to help you save for emergencies so you don’t rely on credit cards to cover them.

3. Stay Focused

Like I mentioned above having a budget helped us see how much we had to spend and helped to keep us focused on our goals.

Getting out of debt was a big goal for us. We were done with having credit card debt hanging over our heads. Done with having little to no savings, done with worrying about how to pay for emergencies when they came up. We were done.

We knew things had to change so we could meet our goals.

Making a budget shed light on our poor spending (or overspending habits). If you don’t know what they are, you can’t correct them.

Each time I looked over the budget I knew what we needed to do. It helped us to refocus our attention and stay on track. It can help you too.

4. Plan for the Unexpected

When you don’t have a plan, or ahem a budget, how can you plan for the unexpected. Now I know that sounds strange. But the unexpected will always happen.

There will always be little cost here and there that will need to be paid, little or big things you didn’t consider. But when you have a budget, you can adjust for those unexpected expenses.

When you budget, you can shift where you spend money from one thing to the next to cover those unexpected items that will arise.

Why We Still Budget

Even though we are debt free, we still budget to make sure we stay out of debt.

We know it would be easy to fall into poor habits to put less into saving to pay off the credit card because we charged too much in a month.

When we track where our money is going it goes to the important things, and it doesn’t just go.

Now if I’ve convinced you, that you need a budget but you don’t know how to make a budget, don’t worry, I’ve got you covered.

How to Make a Budget to Save Money

Check out the budgeting series, in a few weeks you can build a budget you can live with. It takes a little time and effort but it will pay great dividends.

Plus you will have a realistic budget you can stick with long term. Instead of pulling figures out of thin air.

Monthly Budget Spreadsheet

If you want to track your budget on your computer check out the monthly budget spreadsheet I use to track our finances.

Or if you are a pencil and paper type person grab a copy of the printable budget sheet to help you plan like a pro.

What’s your biggest struggle with budgeting every month? Leave me a comment or email me and let me know.

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