Budgeting might seem to be an arduous task, but it is a necessary task. It is something you must do if you truly wish to be successful and in control of your wealth. Below are some of the benefits of adequate and proper budgeting:
- Total control of your expenses: Properly and well- orchestrated budget will enable you to have control over how your money is spent, thereby preventing you from incurring unnecessary debts and expenses. It will enable you to spend within your means. Thomas Jefferson once said “never spend your money before you have it”. The problem with most people is greed. You want to own everything good and even sometimes, useless. Remember, “if you buy things you don’t need, you will soon end up selling things you need” – Warren Buffet. Before you make any purchase, you need to sit down and ponder on the importance of that thing in your life, do you really need it? You must ask yourself. If it can’t add any extra value in your life, why spending on it? “Too many people spend money they haven’t earned, to buy things they don’t need, to impress people they don’t like” – Will Smith. What a folly way of life.
- Keeps your finances on track: Budgeting helps you to monitor the movements of your money. What you spend your money on, how you spend it, where it goes, how the money is coming in, how fast it goes and how fast it comes. You will have a clearer perception and a better understanding of your financial status. Budgeting is very useful in the sense that it enables you to identify your financial leakages and provides an avenue for amendment. Leakage is the outflow of money from the earning, resulting in a gap between demand and supply. In keeping track of your money, budgeting acts as an indicator of financial crisis by providing you with an early warning signs of an impending trouble.
- Aids in investment forecast: Budgeting will greatly aid you in your investment plans. It gives you an idea of how much income you will be expecting, and how much that will be spent. You can then safely plan on how much to save for emergency and how much to invest for the future. Predicting the future is very difficult – unless of course you are the “man who saw tomorrow” which I am sure you are not. But through budgeting, you can have an insight of what the future holds. It will give you the power to create and shape your future to the best of your ability.
- Helps you to prioritize your goals: Budgeting makes it easier to focus more on your goals than on frivolities. Without proper budgeting, you will be swimming in the sea of confusion and at the end; the most vital things of life are left undone. Prioritizing your needs will keep you sane, cool, calm and calculated, which leads to a greater sense of achievement. Develop a scale of preference; you must know the difference between what is urgent and what is vital in your life. Don’t spend too much time on what is urgent, rather attend first to what is vital and find a way to manage what is urgent. That is the way you can accomplish your goals very fast.
- Emergency shock absorber: Budgeting provides you an environment to set aside money for unexpected problems. Problems don’t announce themselves before occurring. One of the benefits of budgeting is that it creates room for emergency savings. The best general insurance you can ever have is your emergency savings. It has a unique and beautiful way of absorbing any kind of shock you might encounter, bolstering your confidence. Robert Baden – Powell, a lieutenant- General in the British army (1876 – 1910) and the founder of the International Scouting Movement, also known as the “Boys Scout” while addressing the boys on the meaning of their motto “Be Prepared” said “the meaning of the motto is that a scout must prepare himself by previous thinking out and practicing how to act on any accident or emergency so that he is never taken by surprise”. That is what budgeting does to your life in the face of emergency.
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