There are many reasons to create a budget and keep track of all expenditures in addition to increasing your surplus. I’ll list a few below for your consideration:
1. Create discipline and organization
Having a budget allows you to be disciplined and organized, which is the first step in understanding your overall financial situation. Without easy-to-read data, it’s impossible to know what’s going on. The good news is that once you have a routine in place, it doesn’t take long to get up to date with everything.
2. Forces you to think about money
This is a side benefit of budgeting, but it’s also important. The more time you spend thinking about money, the more you can focus on building wealth. Once you start thinking about money more often, you’ll be able to find more ways to save and generate income.
3. Crisis prevention
Regularly reviewing your finances allows you to spot trends and see where improvements can be made before problems arise. By preventing problems before they occur, you’ll be miles ahead of others who can only react.
4. A great tool to start family discussions
Money is always a difficult topic to discuss. If the whole family is involved in budgeting and spending tracking, the discussion will be much easier. It’s best to lay out the facts and reason when discussing money, and a spending tracker is the perfect aid in this regard.
5. Quantitative ways to measure progress
In theory, we all want to spend less and make more money, but without actually tracking progress, it’s impossible to know how well you’re doing. If you want to become more efficient at saving money, tracking a budget to measure progress is not only a benefit, it’s a requirement.
Without a budget, how do we know if we’re achieving our goals?
6. Knowledge is power
By keeping track of your budget, you know exactly how much money you need each month. This allows you to plan and build an emergency fund and feel confident that you have plenty of cash. You can also easily calculate how unexpected issues such as losing a job or having a baby will affect your finances.
7. Reduce stress
Knowing exactly where your finances stand can relieve a great deal of stress because you don’t have to worry about the unknown. Even if your financial situation is precarious, you will spend your time solving problems rather than trying to figure them out.
