Why Do You Budget?

In my previous post I asked the question; Do you budget? This post got a fairly nice response in return, and 90% of you responded that you budget. Point taken, and take makes the majority of us on the same page. In this post I want to get behind the wall and find out the real reasons you budget. By now most of us know that budgeting is good for us in multiple ways, and that it’s a solid starting point towards financial independence.

So, why do you budget?

People save money for various reasons. Some are working hard in saving their money for larger purchases, such as a home or a car. Most of us are  budgeting to fund our retirement savings goals, so that when we retire we can mostly live off of our savings. Others budget to be prepared for the future in case of an emergency.Everyone’s budgeting goals will be different and no two will be the same. Similar? possibly, but never the same.

The key to budgeting and getting the most out of your budget is to gain a habit. Actually make that two habits. The first habit is the “The Habit of Savings” and the second would be “The Habit of Controlling Your Spending”. The two habits work hand in hand. You can save all the money every month, but if you blow your budgeted savings, you’re still at square one.

And with that in mind, budget accordingly and stick to your budget. Find a goal that you’ll budget for and stick to it. The most important step is to get started. Start small, and don’t dip into your savings unless it’s an emergency. You’ll need that money for other goals in your future.

I hope that you budget. If you’re not budgeting, then I’d love to know what your brilliant alternative idea to budgeting is exactly.

I Budget Because…..

1. Control

I like to be in control of my money. I want to know exactly how much I’m bringing in every month and how much of it is going back out. I budget and track my expenses so that I am sure I haven’t forgotten anything. I budget to plan for the future, whether I want to take a vacation or buy that fancy car. Budgeting gives me a sense of reality, and when I do set any goals my budget will give me an idea of how long it will take me to reach my goal.

2. Future Planning

The only way to plan for the future is through budgeting. Whether you’re looking to buy your first home, second home or purchase a car, budgeting for it before the purchase, pre purchase and post purchase is essential. I’ve never been the one for surprises, and I’ve always tried to limit the surprises by planning ahead. I try and be prepared as much as possible for what lies ahead. Even though it’s impossible to predict the future, planning for the future is never a bad idea.

3. Keep My Spending in Check

I’ve made my share of money mistakes in the past (How I go into $9K worth of debt) , and I’m not ashamed to admit it. Most of the mistakes came directly from not knowing where my money was going in the first place, and the single reason why I never know where my money was going is not having a budget in the first place.

Sometimes I buy things, regret them later, and I end up returning the item.. and other times, I feel good buying something that I really didn’t need,  but because I wanted it for a long time (usually), I had the money for it, and it was in the price range I was willing to pay for.

I review my monthly budget at the end of every month. For example if I budgeted $100 for groceries and I spent $250, I blew $150 over the budget. Instantly I know that for the next month’s budget that I’ll have to make an adjustment, and get under budget.

Now that I’ve told you my three biggest reasons for budgeting, I’d like to know a little about your reasons for budgeting.

So, why do you budget?

Eddie