The 7 Benefits of a Budget

I have not always been a hard budget person. To me, there weren’t many benefits of a budget. The tight structure, limited spending freedom, and the meticulous nature were not appealing. Keeping a loose grip on my finances was how I liked to live my life.

As finances and responsibilities added up the freedom of loose spending began to slip away. It didn’t take long for me to find that I didn’t have much money to spare on hobbies. That is until I decided I needed to better manage my money. With a small time commitment, I was able to track my expenses and map out my flow of money.

It didn’t take long to find out I was missing out on the benefits of a budget:

Budgets help you track expenses
Budgets help you avoid fraud
Budgets help you save money
Budgets help you with fun money
Budgets help you with accountability
Budgets lead to better money management
Budgets make life more affordable

7 Budget Benefits

The following are the benefits that I experienced personally while living within a budget:

1. Budgets Help You Track Expenses

Budgets help you track expenses. When you start a budget you have a set amount of money that is meant for various expenses. These expenses can be bills, food, rent, insurance, and many other things.

Without a budget, money can slip through the cracks without you ever being aware of it. Maintaining a budget means that you are tracking your expenses. You will know monthly, weekly, and or daily, depending on how often you are tracking, how your money is being spent.

Tracking your money gives you the ability to manage your expenses. Maybe in your day to day, you are spending too much money on food. If you aren’t tracking the expense, this over expenditure wouldn’t be easy to spot.

2. Budgets Help You Avoid Fraud

Budgets help you avoid fraud. If you are diligent in keeping up with your monthly budget you will be keeping an eye on your expenses. Being mindful of how your money is being spent will increase your chances of spotting fraud.

For example, a couple of years ago we noticed about $100 dollars of our’s being spent at a sporting goods store. I talked with my wife and neither of us had made a purchase at the store. We reported the fraud and thanks to our credit card, we’re able to get our money back.

Another way budgets keep you safe from fraud is by preventing you from spending your money. Keeping track of how your money is being spent lets you know how much you have left. If there is no wiggle room in your budget you won’t find yourself spending $300 on a toolset from a sketchy website.

Sticking to your budgets helps keep you and your money safe.

3. Budgets Help You Save

Budgets help you save money. Part of your budget should be savings. Even if it is a few dollars each month you should leave room in your budget for savings. Each month I know at least $50 dollars are going into my savings. This money is put straight into a savings account and saved for future purchases or emergencies.

Savings are important. Saved money can help with a big down payment, vacations, repairs, and or emergencies. Having money in savings, even if it is just a little, I find, helps with my mental health. In a way, it reduces some stress knowing that I still have money saved.

Sticking to our budget we were able to save enough money that we could buy the car that we wanted with cash. Even though paying in cash isn’t necessary, for us, it is what we wanted to do to avoid car payments.

Savings gives you purchasing power for the future.

4. BUDGETS HELP YOU WITH FUN MONEY

Budgets help you with fun money. This is my favorite part of a budget. Once you have all your expenses and savings set aside, what is left is what I consider fun money. Not everyone’s budget will allow for fun money, some might barely cover expenses. For the budgets that do have leftover money, treat yourself to some guilt-free fun.

You have been responsible with your money. Your expenses and savings are taken care of, so put some money towards something that will make you happy. Maybe it is only $5 dollars, maybe it is more. The important thing is, this is your money to do what you want with it. Have fun. There is no such thing as waste when it comes to fun money.

My wife and I like to have our own separate fun money accounts. We like this because we both have different ways we want to spend money. She is more inclined to buy clothes, and nail polish. I like spending my money on camping, video games, and other hobbies. As long as we are staying in our allotted budget we have the freedom to spend money on what we want when we want.

I’ve actually tried to create a budget for my fun money. A budget inside of a budget. While I haven’t been the most successful sticking to the fun budget, I have managed to build up a nice savings of fun money. This savings is critical for the big purchases in the future (looking at you Xbox Series X).

5. BUDGETS HELP YOU WITH ACCOUNTABILITY

Budgets help you with accountability. Creating a budget and sticking to the budget will make you accountable. Accountability will vary depending on how often you are tracking expenses and looking at your budget.

Accountability helps you track and get results. Want to cut down expenses? You will need to track where and how your money is being spent. Want to save money? You will need to make a firm commitment to not touch your savings once money has been put in.

A while back, I quit my accounting job to pursue web development. This meant that we moved from two incomes to one. We cut back on our expenses, savings, and fun money. However, we still lived comfortably because we had a budget and we made sure we stuck to it.

The Drastic financial lifestyle change was possible because we were accountable for our finances. We knew where our money was coming from and where it was going. This accountability allowed us to adapt from two incomes to one without adding stress.

6. BUDGETS CAN LEAD TO BETTER MONEY MANAGEMENT

Budgets can lead to better money management. Having a budget means that you will be managing your money. The more you manage your money the better you will become. This could lead to increased savings, decreased expenses, and even more play money.

Better management will help you navigate expenses. This can help reduce the number of times you will need to rely on emergency funds. Knowing your tires on your car are wearing out could lead to you saving extra money to eventually pay for the new tires.

7. BUDGETS MAKE LIFE MORE AFFORDABLE

Budgets make life more affordable. Budgets help you map out all of your expenses. You are able to see where your money is going. This gives you the ability to make decisions like cutting out some variable expenses. Reducing costs will lead to a more affordable lifestyle.

THE NEGATIVE SIDE OF A BUDGET

Having discussed a few benefits that I have found from having a budget, as a bonus, I would also like to mention some of the negative sides of a budget. It is important to note that these setbacks are personal opinions and should be treated as such.

1. BUDGETS TEND TO BE RESTRICTIVE

Budgets tend to be restrictive. With a budget, you are putting restrictions on your money. You decide how much is going towards expenses, living costs, savings, and fun. If you are going to be on a budget you will be restricted by your allotment.

For a good portion of my college years, I avoided a budget because I didn’t want the money restriction. I have very little money then, and with what little I had, I wanted no restraints.

Looking back on those years now, given what I know about budgets and all of their benefits, I am still not sure I would have kept one. Running out of money before the next paycheck or getting through the month with a surplus was all part of the experience. OK, OK, I would probably implement a very light budget. Those times I ran out of money was rough adventures.

2. BUDGETS TAKE TIME

Budgets take time. This is probably the only real drawback to a budget. It takes time to create a budget. There are a lot of budget tools out there. It will take time to find the tool that works best for you.

For me, I created my own budget spreadsheet. This took a little longer than using a premade budget, but I love my spreadsheet. It has all the calculations I want and is completely customizable. Depending on if you make your own budget tool or use someone else’s it is going to take you time to create your budget.

On top of that, sticking to your budget is a continual commitment. Depending on the frequency you check out budget (mostly tracking expenses) will determine the amount of time you are spending.

3. BUDGETS ARE A LEADING CAUSE TO EXCESS WEALTH

Budgets are a leading cause of excess wealth. This is a statement that I haven’t fact-checked at all. Yet, I’m willing to die on this hill. Budgets are the number one cause of excess wealth. Cutting expenses, increasing savings are no strangers to the budget lifestyle. Some people might not want more money.

More money, more problems is never something I have experienced. It could be that I haven’t had enough money for those problems to occur. For those that have experienced this though, they might want to steer clear of the number one leading cause of excess wealth.

BUDGETS ARE GOOD FOR YOUR MONEY

When it comes to finances, there are many benefits of a budget. Budgets are the number one leading cause of excess wealth. Tracking expenses, avoiding fraud, saving money, fun money, and accountability are all benefits that I have experienced with my budget. If you don’t have a budget yet give it a try. If you need help getting started feel free to ask in the comments section. If you have budget advice or experienced any other benefits be sure to share those as well.

The Benefits of a Budget