(The following is a guest post)
I often find budgeting a tiresome chore, but I know the end results are worth it. People often ask me why I’m so confident about my financial situation and how I can afford to buy new gadgets or take long holidays and the answer is, because I plan for them. I know exactly how much my monthly expenses are, how much my wife and I’s combined and individual incomes equal and how much we have in the bank. Information overload perhaps, but financially secure.
In addition to the obvious benefits of a budget there are also several hidden advantages that people don’t expect or anticipate when they start structuring their finances. Yes these things have to be worked at and in the beginning they can be hard, but the impact financial freedom can have on your life is phenomenal.
One of the biggest hidden benefits of budgeting is knowing how much you can spend on recreational activities such as holidays, nights on the town. If a friend asks you to join them for fun weekend away or you decide your family deserves a relaxing break you don’t have to scramble to organise funds or go into debt. A budget is all about saving, reducing debt and being able to afford a lifestyle that you actually want, and that includes having fun because you’ve earned it!
Knowing your financial position is a major benefit of budgeting as you can easily calculate expenditure and available funds. By being informed of your financial position you can quickly calculate the outcome of different scenarios, such as if you or your wife are laid off, if interest rates fluctuate or if an emergency expense arises. A successful budget is also a vital tool for success in other areas as it teaches discipline, management and self control.
The reality of a budget is that it allows you to be in control over your financial situation and to make the most of your income. It gives you peace of mind and allows you to relax about your finances as you can clearly pin point where your money is going and where to cut back if need be. Life may be about more than just money, but if the bills are paid it makes it much easier to keep smiling.