13 Surprising Budgeting Benefits

We can’t stress it enough; budgeting is the only way to achieve good financial health. It doesn’t matter if you want to FIRE or stop living paycheck to paycheck; a budgeting process that works for your family is essential.

If you’re still flying by the seat of your pants, check out these 13 surprise budgeting benefits that we’re confident will change your mind.

What Are Budgeting Benefits to Know?

You know budgeting keeps your money on track, but these budgeting benefits may help you rethink budgeting and possibly embrace it.

1. Keeps You Focused

Everyone has financial goals, but if you don’t name them and then budget for them, chances are you won’t reach them.

That’s why one of the most significant benefits of budgeting is setting goals and staying focused on them. Otherwise, what happens?

If your spending habits don’t align with your goals, you’ll see that you have extra money left and splurge on that item you’ve been drooling over when it should have been saved for money for a car or, better yet, your emergency fund.

2. Prevents Overspending

You don’t know how much you have to spend when you don’t have a budget. You might think you know, but without a budgeting app or even a scratch piece of paper to consult, you might spend more than you have because you just don’t know.

This is especially prevalent today since most people are swiping their plastic or paying with their phones. Today you don’t need cash. In fact, many places won’t accept it. But when you pay with a credit card or make contactless payments, you can quickly lose track of what you’ve spent or how much you can spend.

3. Emergency Planning

Bad things usually happen when we least expect it or are the least prepared. But when you have a budget, you ensure you have enough money to cover those unexpected costs. So while a budget won’t make you feel better when you’re ill or bring back a loved one, a budget helps keep your finances intact while you deal with the emergency.

The last thing you need is the stress of finances on top of the issue life throws your way. Instead, try saving three to six months of expenses to cover you when bad things happen. Then, if you use your emergency fund, your budget will help you rebuild it when the time’s right.

4. Identifies Bad Spending Habits

One of our favorite budgeting benefits is that it uncovers your bad spending habits. As you create your budget, you’ll see how much you spend on certain things. It can be pretty eye-opening.

For example, you might find excessive subscriptions you pay for and don’t use or that you spend too much money on things like cable or internet. Creating a budget makes you more aware of where your money goes and puts you on the right path to saving more. Think of it as putting yourself back in control of your money.

5. Helps Plan for Retirement

The right budget will take into consideration your future financial goals too. So even if you have the perfect budget set up for the present, not thinking about your future financial security can be a risky misstep.

Budgeting helps you allocate enough money to your retirement accounts. Whether you have a 401K at work, set up an IRA, or have taxable accounts, setting money aside monthly for retirement is important for financial stability as you get older.

6. Create Disposable Income

Disposable income is money available after paying your monthly bills. Everyone needs disposable income to cover the day-to-day cost of living and fun! However, budgeting doesn’t only cover your bills; it means setting yourself up so you can enjoy life while ensuring you have enough money for your current and future financial goals.

Related Article: The Best Budget Books to Achieve Your Money Goals in 2023

7. Gives You Control

It’s a much better feeling to be in control of your money rather than your money controlling you. No one likes the feeling of spending and hoping they have enough to cover it or that they aren’t spending money meant for their mortgage.

When you have a good budget, you know how much you can spend and where to allocate your funds. It helps you make wiser decisions and gives you more control.

8. Increases Communication

Creating a budget makes it much easier to talk to family members about money. When everyone can see where the money goes, what you must cover, and what they can spend, it’s much easier to keep everyone on the same page. In addition, having a budget puts everyone in charge of meeting your family’s financial goals and sticking to the spending plan.

9. Decrease Financial Stress

When you have a budget, you have less financial stress. Of course, this doesn’t mean you won’t be stressed, because everyone worries about money. But when you know where your money goes and can monitor your progress, you’re much more likely to feel better about your financial situation and where you’re headed.

10. Teach Your Kids Good Financial Habits

There’s nothing wrong with including your kids in your budget at an age-appropriate level. For example, if you’re saving for big purchases that benefit the entire family, consider including the kids in the budget so they know why you might say no to other things.

Showing your kids how you budget and why you make the financial decisions you do also helps them build better financial literacy. If budgeting is natural to them, they’re more likely to use it as soon as they are independent instead of living paycheck to paycheck and catching up later.

11. Helps you Understand what you can Borrow

Most people can’t pay cash for everything and will need financing at some point. For example, when you buy a house, you’ll likely need a mortgage. However, when you have a well-thought-out budget, you know exactly how much you can afford each month.

This is important, so you don’t exceed your budget and become house poor. The same is true if you borrow an auto loan or apply for credit cards or any other debt. You must know what you can comfortably afford to avoid getting in over your head.

12. Avoids you Getting in Over your Head

Missing one payment may seem like an isolated incident, but it can quickly snowball into larger issues if you don’t have a budget. When you have a well-planned budget, you can account for unexpected expenses and have an emergency fund you can tap into as needed. However, without a budget, you might not have those extra funds lying around, and one late payment can quickly snowball into many, ruining your credit and making it hard to get back on your feet.

13. Helps Improve your Credit

When you pay your bills on time, you improve your credit score. Your payment history is the largest part of your score, and budgeting can be imperative. Knowing which bills are due and how much you need to cover them can be the secret to building that great credit score you’ve always wanted.

Budgeting Challenges

Of course, this doesn’t mean budgeting doesn’t have its challenges. Here’s what you might face.

Finding a Method That Works For You

There are hundreds of budgeting options. Finding the one that works for you can feel like finding a needle in a haystack. Don’t overthink it. Instead, consider what you want from a budget and find one that meets those needs.

Too Rigid

Budgeting often feels rigid. It might even make you feel guilty if you spend an extra penny. Of course, they aren’t meant to be that way, but many people feel strangled by a budget.

It Takes Time to See Progress

You won’t see budgeting benefits overnight. It could take weeks or months before you see any changes. It’s easy to get discouraged, but stay the course and don’t give up; you’ll see progress soon.

Change Can Be Hard

If you’re stuck in your ways, it can be hard to change how you handle your finances. Fortunately, there are many budgeting tools and programs to try, so you can find the one that sits best with you.

Budgeting Tools

The internet has hundreds of budgeting tools, but we’ve narrowed down the top tools we think will help you stay on track.

Spreadsheets

Spreadsheets are free and a great way to budget. However, creating a budget from scratch can feel overwhelming. Fortunately, we created a Google Sheets Budgeting template that’s free and easy to use if you need budget help!

YNAB

YNAB (You Need a Budget) is budgeting software and an app. It uses the theory that every dollar has a ‘job.’ This theory should help you save money for future expenses so you’re not caught off guard. It’s a little pricey, but it helps you be intentional with your funds, so you don’t exceed your budget.

Empower

Empower does everything, including budgeting, tracking your net worth, and managing wealth. You link your financial accounts to the app, and it tracks everything in real time; there’s no manual labor required. In addition, Empower has a free and paid version, so there’s something for everyone.

Tiller

Tiller is an automated personal finance service that automatically links to Google Sheets or Microsoft Excel. Consider it spreadsheets on steroids! You see all your income, expenses, and account balances in one place and can easily make important financial decisions. You can budget for the present and plan for the future all in one place.

Benefits of Budgets: Final Thoughts

There you have it, the top 13 budgeting benefits! We know it’s overwhelming and can feel restrictive, but we promise once you start, you’ll wonder why you didn’t do it sooner. But if budgeting still feels like too much, we encourage you to check out our Budgeting Bootcamp and see how easy it is to budget in 20 minutes a month!