Budgets help individuals enhance their financial well-being
Budgeting is one of the single most effective tools for money management. It's an effective way to map out spending to help manage your money and help ensure you will have enough money for the things you really need and the things that are important. A budget or spending plan can help budgeters reduce debt and keep finances on track while also increasing the likelihood of meeting short term and long term financial goals. A recent longitudinal study conducted by the Financial Consumer Agency of Canada (FCAC) summarized the importance of personal budgets: "Budgets help individuals enhance their overal financial situation and improve fianancial attitudes and outcomes". Here are some really key benefits to using a budget to manage your personal finances
10 excellent reasons for using a budget to manage your finances
- Budgets brings awareness around where money is being spent
- Budgets help align spending with priorities in order to reach financial goals faster
- Budgets can with debt paydown
- Budgets can help build savings for the future
- Budgets can help with saving money for emergencies or unexpected costs
- Budgets can reduce spending and spending regret
- Budgets can lead to less reliance on credit or help determine if more debt can be supported
- Budgets can help eliminate unnecessary spending like late fees, penalties and interest
- Budgets provide a "Big Picture" view and provide as an early warning system for potential problems
- Budgets when shared with a spouse or family provide a framework for sharing common financial goals or "action plans"
Budgets give you control over your money instead of letting your money control you.
Looking to get started? The Financial Consumer Agency of Canada provides a budget calculator online to help you make a budget. Check it out here FCAC Budget Calculator
The goal is to create a balanced budget and limit your actual spending as much as possible to what is in your budget. If your spending varies each month you may need to readjust the budget to make it more realistic but make adjustments in order to still reach your financial goals including debt paydown. Making budgeting a regular habit can make a real difference to your financial well-being.
Feel free to reach out and connect if you're looking for help a budget template that many of my clients have had great success with.