Credit Tip Tuesday #49 Reasons Why You Should Budget

While it definitely is easier said than done, budgeting definitely has it reasons on why you should implement it. The benefits you gain also might not necessarily be ones you will notice in the short term but rather long term. If you haven't already started a plan for budgeting, we'll go over our reasons why you should consider budgeting your money if you want to plan for a better future financially.

Reduces spending money you don't have

With a budget, you are able to reduce the tendency of spending money you have not earned yet. An example of this would be paying for everything constantly with a credit card. While using a credit card does have its benefits, it only yields these benefits if utilized properly, such as keeping a low spending and also keeping the payments consistent.

Just because you have a $5000 limit doesn't mean you should use the whole amount each month. This not only slows your growth financially but could have some repercussions in the long term such as the inability to afford larger purchases such as a home, car. As well as creating a low credit score due to the inability to paying off these credit card statements

Helps create an emergency fund

The general rule of thumb for when it comes to budgeting is to first pay off your debts, and then save enough for an emergency fund. What an emergency fund is used for is if there is an event that expresses financial hardship, such as losing a job or being unemployed for a period of time. You should aim to have about 8 months worth of finances in order to take care of yourself.

This fund should be stored away and not be spent on freely if you aren't in a situation where you don't need to access it. These funds are useful for being able to pay off cell phone bills, mortgages, and even groceries in order for you to live worry free during rougher times.

Makes you aware of bad spending habits

When you start to budget, you become aware of areas in which you can improve on financially. For example, you might find yourself eating out less or shopping for clothes less often if you begin budgeting. These habits are a good aspect of your spending that you should be wary of as it diminishes the growth of your financial journey. Sure, a treat to yourself every now and then won't hurt but when it becomes a consistent act, that is when it becomes a little bit concerning.

Saving now leads to a better future

While blowing off your pay-checks seems like a more entertaining and great use of your income, it hurts yourself in the future financially. Sure you can enjoy going out to the bars, buy all the clothes and gadgets that you want. But when it comes a point in life where you need to purchase a home and really think about supporting a family, these tasks are not easy when you spent all your money in the earlier stages of your life. 

Gives you something to work towards

When budgeting, this gives you a target perhaps might want to reach in life as a milestone. This could be your first home or even your first $10,000 saved. Whatever your savings target is, budgeting is going to be your best friend in attaining these goals. 

If you want to purchase a home by a certain age in your life, being able to put aside the proper amount of money each paycheck would be one way to earn this goal. This allows you to control your spending and give you a reasonable estimate as to if this goal of yours is feasible or not.