Let’s be honest: There is nothing glamorous or fun about budgeting. In fact, a lot of people just don’t take the time to budget, and if they do create a budget, they don’t keep it current, which is pretty much like not having a budget in the first place. Oftentimes, it’s because they don’t want to face their financial realities, and for anyone who struggles with budgeting, they just don’t understand how budgeting can truly lead to both short-term and long-term wealth. Which is something 99.9% of people would like to achieve. On the flip side, not budgeting can quickly lead to the opposite of wealth: poverty. Which is where pretty much 100% of people would rather not find themselves.
So, how can budgeting impact your overall wealth and help you achieve both your short-term and long-term financial goals? Here are 7 reasons you might want to make budgeting a priority so you can reap the main benefit of budgeting: wealth.
1. Budgeting gives you a crystal-clear view of your financial picture every minute of every day. It makes you aware of where every single penny of your money is going to and coming from: any income, any expenses, and everything to do with your money. Of course, this picture can be dimmed if you don’t keep your budget current, so it’s important to make budgeting a regular part of your routine so you can keep that picture as clear as possible, which leads to greater wealth.
2. Budgeting helps you get out of debt, stay out of debt, and save for the future. Money owed takes away from money you can save now and for years to come. Let’s break this down further.
- Debt: When you budget, you know exactly what you owe and you can see where you can allocate extra money to pay down that debt more quickly, saving money in interest charges. Budgeting can also help you stay out of debt because you’ll be less likely to spend money you don’t have and don't realize you don’t have.
- Savings: Besides saving for retirement, it’s crucial to have money set aside for unexpected things that can happen in life: emergencies (medical, vehicle, home, etc.) and layoffs or furloughs—the pandemic has been a tough teacher as to how quickly these can happen, as well as money for college educations, travel, and other fun expenditures you can work into your overall budget while still progressing towards your long-term savings goals. Without adequate savings, one small financial blip on the screen could be your total undoing. And no one wants to deal with that!
3. Budgeting defines “wants” vs “needs” pretty quickly. When you have a budget—and you follow it (that part is really important!), even though the decisions won’t necessarily be easier, you will be able to make wiser choices when it comes to expenditures. And when you can develop that habit of choosing “needs” over “wants,” you’re also developing self-control and self-discipline—two qualities you need to create wealth.
4. Budgeting can reduce stress + improve overall physical and mental health, which leads to greater wealth. When you feel better, you’re going to make better financial decisions. And finance-induced stress can spill over into all areas of your life: relationships, work, sleep, overall health, nutrition...everything. On the other hand, a lack of stress and the accompanying feelings of peace can actually improve your health! Knowing that you have your finances under control through budgeting can offer that oh-so-important peace of mind so many are seeking for.
5. Budgeting turns money into a tool you can use in positive ways versus a weapon that might hit you over your financial head. Which can be painful in so many ways. And you can then use these financial tools you’ve gained to improve your wealth status.
6. Budgeting can create family and/or partnership unity. When everyone is on the same page and working towards a common goal, those relationships are strengthened. It’s as simple as that. And stronger relationships can lead to greater wealth. On the flip side, money is the leading cause of divorce, according to one study. And it’s difficult to build wealth when there is no financial unity between those whom the budget is trying to serve.
7. Budgeting keeps your end wealth goal front and center at all times. Your budget is like a roadmap from where you are to where you want to end up. It can keep those unseen detours to a minimum, and when you do have to take a detour (those unexpected emergencies we talked about above), you have a map to get you right back on the correct route as quickly as possible, heading towards that wealth at the end of the road.
Still not sure budgeting is right for you? You’ll never know the value of budgeting unless you give it a try, so start out simple and go from there. Try tracking your expenditures for a week just to see where your money is going. Then move on to tracking both expenditures and income for a specific—but not overwhelming—period of time. Once those feeling of ownership and control over your finances kick in, you’ll quickly become a budgeting believer, and from then on, you’ll be well on your way to achieving the wealth and financial security that will serve you for years to come.