Why I Budget!

Why budget

Last week I spoke about how budgeting is not a dirty word (read this post here). Today I want to delve deeper into the reasons why I create and stick to a budget. For me, a budget is a spending plan or a wealth building plan. I plan my budget a year in advance and it allows me to plan out how much I am saving and what I have allocated to spending.

So here it goes – why budget?

My budget allows me to spend on luxury items:

Having a spending plan allows me to plan for and afford luxury spending such as eating out, travelling, clothes and beauty treatments. I can spend on these items without guilt. They fit into my budget and so I have permission to spend in these areas. So long as I stick to the allocated amount each month (or pool several months together) I can spend on these areas and enjoy it.

Budgeting helps me save money & meet my money goals:

By having a budget, I save more money than I otherwise would. When I plan my year in advance, that includes setting a budget for the next 12 months and this ensures that I set aside a pre-determined percentage of my salary each month for saving. These savings are automated so the money transfers from my account to savings and investments the moment I get paid.

My spending plan allows me to work towards a number of simultaneous goals:

My budget allows me to save for a number of different goals, in parallel, including a house, travel and investments. I have more than 10 different concurrent savings and investment goals that I contribute to each month.

It keeps me organised:

For those of you who know me, I am obsessed with organisation. Having a spending plan helps prevent missed payments and disorganisation. I know exactly how much all my bills are and when they fall due. It means all of my bills are paid in full and on time, I don’t go into debt and have to use an overdraft or credit card for my bills or basic spending needs. It also means I don’t have missed payment fees or issues with my providers.

1 Comment

  1. […] The third essential money move you need to make in your 20s is that you set and stick to a budget. A budget needs to be written down (either on paper or electronically) and should be reviewed and updated regularly. Your budget is your spending and savings plan rolled into one and it reflects how you ACTUALLY spend your money. To some people budgeting can sound restrictive, but for me it is completely freeing. Read about why I budget here. […]

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