Let you decide. When you allocate dollars as part of a budget, you give yourself a chance to be thoughtful about where your money is going and to make adjustments, if needed. For example, if you are shocked by how much you’re spending dining out or buying new clothes, you can curtail spending in those areas. Ultimately, knowing your spending patterns gives you the power to put your dollars toward the things that mean the most to you, and help you reach your long-term goals.
Take the pain out of daily decisions. Daily temptations to overspend become easier to navigate when you have a framework and guidance in black and white. Setting a budget equips you with the power to say “yes” or “no” to a purchase without guilt. You’ll be able to see what’s within your price range and get a clear view of how each purchase will impact your savings plan. The more specific your budget is, the better.
Make it easier to see the value of every dollar. When you’re cavalier about your spending, you’re discounting the effort it takes to earn money. In contrast, when you consider everything that goes into earning a paycheck, and the expenses you’re incurring for your home, food, clothing, entertainment and so on, you’ll have a clearer picture of your daily financial life. It’s also important to consider the potential long-term benefits of investing some of your hard-earned savings. It’s likely this will you’ll bolster your resolve even more.