Budgets are not magic. They do not make money appear as if from nowhere. They do not reduce the cost of gas or food or anything that claims a regular percentage of your income.
There’s an argument to be made – and many people make it – that a budget doesn’t solve anything for their particular situation. That the problem is too much money going one way and not enough coming the other, and no amount of spreadsheets or math is going to fix those things.
There are, however, real, tangible benefits to budgeting. It’s not magic, no, but these benefits offer a clear positive impact to your relationship with money. So if you’re still a little iffy on why you need to bother with budgeting, consider the fact that a budget:
Helps you make objective decisions
If you find that your heart makes more financial decisions than you’d like, a budget can help you move towards a more objective approach to money management. Budgets, after all, only lay out the facts of your finances. They clearly show what it takes to keep your bills and your income in balance. When faced with a difficult decision it’s much easier to make smart, constructive decisions if you’ve got objective data there to help you along.
Removes question marks
When you have a very limited amount of available money, every day can be a series of difficult. What do you do with the money you have?
Budgets remove most of those questions, because they’ve already been answered. “This is what I can spend and this is what I’ll spend it on.” When something changes unexpectedly, your budget is there to help you understand the consequences and make an informed choice on how you want to proceed. Budgets take out the guesswork.
Tells you when it’s okay to splurge
A budget doesn’t just tell you when you can’t spend money. A good budget will also show you when and how you can spend money or even splurge without putting yourself at risk. If you need or want something, your budget will show you (objectively) whether or not you can afford it.
Keeps you actively engaged with your goals
It’s all too easy to set a goal and let it fall to the wayside once life starts getting in the way. The beauty of budgets is that they force you to be cognizant of all aspects of your finances, including the money you’re actively setting aside. Budgeting helps you give equal time to both your immediate needs and your longer-term goals, and keeps you from just constantly deferring all those greats things you’ve been meaning to build up to.
Gives you direction in a crisis
Finally, if something goes wrong, a budget can serve as a roadmap of sorts, helping you prioritize your available funds and quickly assess which debts, bills, and other payments need to be addressed. Rather than forcing you to take stock of your various responsibilities, your budget should contain all of that information already, removing at least one burden as you attempt to navigate a financial crisis.