No matter what the long-term goal, budgeting will always be the first step. Always.
Unfortunately, budgeting is fraught with negative connotations. When you think of budgeting you might think of restricting yourself or scaling back your lifestyle.
But budgeting is so much more. Budgeting is about building your future.
Explore why you should budget and how it will benefit your life >>
You’re In Control
Money is one of the biggest causes of stress. 77% of Brits are stressed about money. And worse still, 32% have felt so overwhelmed they were suicidal.
It’s keeping us up at night. It’s stops us from looking at our bank balance. It causes us to impulse spend beyond our means and ultimately make the situation worse. At its very worst it’s making us feel powerless.
Budgeting allows you to keep in control. Seeing exactly how much is coming in and out allows you to better track your spending and make a plan for the future.
Simply having a plan can start to quell the anxiety around a poor financial situation.
You Can Work Towards Your Financial Goals
When you think about your future, what does it look like?
Some people want a big family and an even bigger family home. Some people want a life full of travelling experiences and memories. Some want to retire early. Some simply want the power to never say no to what they want.
Whatever your financial goals, you should look at budgeting as a way to achieve them. Even budgeting on a week by week basis will help you reach the life you want in 5, 10, 15 years time.
If you want to pay off your debts in the next five years, use your budget to put any excess or disposable cash towards your debts. If you're overwhelmed by various high-interest debt repayments eating into your monthly wage - look at debt consolidation as an opportunity to take control of your budget.
If you want to retire early, you can invest your savings in an ISA, stocks and shares or P2P to grow your assets. Check out our p2p loan calculator to see how much you could earn by investing in peer-to-peer lending.
Figure out what you want to work towards and tailor your budget to suit your future.
Remember, time is as valuable as money.
Budgeting Stops You From Overspending
Bad habits and impulse spending makes saving money every month almost impossible.
By using your budget to take care of all the important costs first and allow yourself ‘fun money’, you’re less likely to fall off the wagon.
Ultimately, if you’re not looking at your balance, you’re more likely to spend the money you don’t have. Looking at your bank account every day (every single day) will force you to see where you can cut back.
When you’re conscious of what’s coming out of your account, you’re far less likely to overspend.
You’ll Be Better Prepared For Financial Shock
If you’ve got a budget in place, chances are you’ve been putting money aside into savings or paying off your debts.
Either way, the more you understand your finances, the better the position you’ll be in to deal with any unexpected expenses.
Having that extra money in savings will act as a safety net.
Having less debt to pay off will free up more money to help you pay off whatever curve-ball life throws at you. You can consolidate your high-interest debts with one monthly repayment and pay less interest over all with a peer-to-peer loan.
This will allow more of your monthly income to go towards an emergency fund or to act as a buffer to financial shock.
Having a budget, especially over a long period of time, will allow you to be flexible with your money.
So, Why Should You Budget?
No matter what financial situation you find yourself in and no matter what you’re working towards - budgeting will always be an integral part of moving forward.
Much like the variety of goals, the variety of different techniques to budget as well. Whether you use an app or a spreadsheet template or a pen and paper - make sure you’re conscious of your money and how you’re using it.