We’ve been keeping a monthly budget at our house for a few years now. Recently I’ve gotten lazy about it and my spending habits have really declined. It’s time to review the benefits of a monthly budget and get back on track.
Having a monthly budget and being financially prepared will cover more disasters than any other preparation you can.
No more worrying about:
- -Unemployment
- -Car repairs
- -Sickness and hospital bills
- -Smaller pay checks
- -Unexpected expenses – you know…those little expenses that cause our heart rate to jump when they appear out of the blue.
PreparednessMama’s Top 7 benefits of a Monthly Budget
1. It leaves a couple nothing to fight about (financially speaking) – My husband and I don’t really fight, but having all the expenses in one place and discussing it together has really cut down on the financial stress. It makes for a happier home, giving us an accurate picture of the financial health of our family..
2. You know where you stand with your money – When you take the time to budget and get all your expenses in one place you have a starting place. Even if it’s bad (you don’t have enough to cover the bills) at least you have a place to start. A monthly budget is a living document that should be updated as expenses change.
3. A monthly budget is liberating – Far from being restrictive, having a monthly budget is a way to tell your money where to go. You decide what the priorities are for the month and where your dollars will go. Whether you want to focus on purchasing a special item or building savings, the choice is yours.
4. You can view out of control expenses at a glance – We use our debit card for most food purchases. Groceries and dining spending can get really out of control, but I won’t know that if I haven’t budgeted and reviewed my actual expenses. Budgeting gives me a snapshot so I can address and correct excessive spending.
5. Budgeting helps you to fit in special purchases – There are certain times of the year when my favorite supplies go on sale. I know I can fit in big purchases for food storage or preparedness by adding it to my monthly budget.
6. Budgets are for forward thinking people – they help you plan for even bigger expenses that might take you years to save. Things like vacation, retirement or college. Take a bite out a big expense by putting a monthly portion aside.
7. A budget transforms your money into a tool – Change your mindset about money. Instead of spending money impulsively, use it to reach your goals. Children should be involved in the family budget process and see their parents work a budget, they will learn the value of money. They will also learn why you must sometimes say no to their wants.
Serious money savers always have a budget. You can do it on a yellow pad, in an Excel spreadsheet or be an ultimate budgeter and use the budget portion included in your accounting program. I use Quicken, but any program that lets you keep track of your purchases and balance your accounts will have a budgeting page you can utilize.
When we began budgeting it required an hour or two of our time. Now I get all the figures together and schedule monthly budget reviews with my family. That might sound excessive, but we actually do get together and review the expenses and the family goals each month. We even build in rewards for staying on budget.
University of Florida – Managing in Tough Times
There is a simple secret to budgeting, one that’s easy to forget – If you don’t follow them, they don’t work! The biggest benefits of a monthly budget? Simpler life with less stress. Now who wouldn’t want that? There are affiliate links in this post. Thanks for supporting PreparednessMama in this way.
Preparedness Mama and its collaborators have created a one-stop shop of critical resources for families looking to prepare for disaster. We know firsthand that getting ready for the worst with a big family poses some particular challenges.
We’ve learned from the past so that you don’t have to make the same mistakes again. Fear of the unknown is one of the scariest things in life, but we hope that Preparedness Mama’s treasure trove of practical advice will make that unknown less daunting and ultimately help take the scared out of being prepared for every single one of our readers.
FAQs
A budget can also set you on the right path to achieving your financial goals, spending within your means, saving for retirement, building an emergency fund, and analyzing your spending habits.
What are the 6 main purposes of a budget? ›
A budget can also set you on the right path to achieving your financial goals, spending within your means, saving for retirement, building an emergency fund, and analyzing your spending habits.
What are 3 benefits of using a budget? ›
Budgeting keeps your finances under control, shows when you need to make adjustments to your spending, and helps you decide where your money goes instead of wondering where it all went. Budgeting helps you answer these important questions: Where does all my money go? Is there a way to spend less?
What are the advantages of a planned budget? ›
Making a budget can help you:
- set spending limits.
- find ways to pay down your debts.
- reduce costs and save more.
- live within your means.
- reduce financial stress.
- have more money for things that are important to you.
- feel in control of your finances.
A spending plan is a method for distributing your income among the mix of things you want and need. Creating a spending plan ahead of time will allow you to effectively manage your finances and determine where to best spend your money.
What is a major advantage of budgeting? ›
A major benefit of effective budgeting is it compels managers to think ahead, it aids managers in communicating objectives to employees and it provides benchmarks to evaluate subsequent performance.
What are the 5 steps of budget preparation? ›
Six steps to budgeting
- Assess your financial resources. The first step is to calculate how much money you have coming in each month. ...
- Determine your expenses. Next you need to determine how you spend your money by reviewing your financial records. ...
- Set goals. ...
- Create a plan. ...
- Pay yourself first. ...
- Track your progress.
Any successful budget must connect three major elements – people, data and process.
How do individuals benefit from creating a budget? ›
A budget is a plan that shows you how you can spend your money every month. Making a budget can help you make sure you do not run out of money each month. A budget also will help you save money for your goals or for emergencies.
What are the five functions of a budget? ›
The five purposes of budgeting are as follows:
- Resource allocation.
- Planning.
- Coordination.
- Control.
- Motivation.
Planning, controlling, and evaluating performance are the three primary goals of budgeting.
What are the 3 P's of budgeting? ›
Introducing the three P's of budgeting
Think of it more as a way to create a plan to spend your money on things that matter to you. Get started in three easy steps — paycheck, prioritize and plan.
Why is it important to prepare a budget? ›
A budget can help you determine your long-term goals and put you on the path of working towards them. Having a set criteria or map of how to allocate your spending will ensure you can live within your means and work towards the purchase of those items such as a new car, down payment on a house or even a family holiday.
What are six disadvantages of budgeting? ›
Disadvantages of budgeting
- a budget could be inflexible, and not allow for unexpected circ*mstances.
- creating and monitoring a budget can be time consuming.
- budgeting could create competition and conflict between teams or departments.
- if targets are unrealistic, employees could become stressed and under pressure.
At the most basic level, a budget is a way to keep track of the money you are getting and the money you are spending. A budget is a great way to make sure that you can cover your expenses from month to month.
What are the three main purposes of budgeting? ›
Planning, controlling, and evaluating performance are the three primary goals of budgeting. Planning: Budgeting is a planning tool that enables businesses to establish quantifiable financial targets for the future. They are able to prioritize tasks and allocate resources more wisely as a result.
Why is it important to have a budget? ›
A budget can help you determine your long-term goals and put you on the path of working towards them. Having a set criteria or map of how to allocate your spending will ensure you can live within your means and work towards the purchase of those items such as a new car, down payment on a house or even a family holiday.
Why are monthly expenses important? ›
In essence, the monthly budget stands as the compass guiding one's financial journey, offering a roadmap to fiscal stability and freedom. It not only helps in achieving your long-term financial goals but also helps in managing funds in case of an emergency.
What is one of the benefits that results from budgeting? ›
Financial uncertainties and risks are an inherent part of business operations, but budgeting helps identify some of these risks, enabling proactive risk management. A well-structured budget allows you to anticipate your business cash flow, ensuring that there are enough funds to cover operational and investment needs.
