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.