5 reasons you should finally start budgeting

For many people, budgeting means chore and restriction. But rather than that, what if we told you that it’s a tool that can help you become financially independent, enjoy greater peace of mind and accomplish your projects?

Yes, by organizing your personal finances, choosing to cut back on certain expenses and saving intelligently, you’ll be able to use your hard-earned money for projects that really matter to you, such as buying a house or a cottage, starting a family, taking a long trip, organizing your wedding, early retirement, etc.

You’ll also limit the financial stress associated with monthly payments and debts!

Still not convinced? Let’s take a closer look at five reasons why you should finally start budgeting!

1. You’ll know where your money is going

The first step in planning a budget is to analyze all your expenses. This exercise, although not very pleasant, will enable you to know exactly where each of your precious dollars is going.

You may find that you spend far more on restaurants or clothes than you realize… Or that your “little” daily trips to the grocery store to buy “just what’s missing” become an exorbitant amount when added up!

In short, whatever your take-aways, this in-depth examination of your expenses (and your conscience) is an opportunity to better target your priorities:

• Which budget items would you like to and can you cut?
• What should you do with these new surpluses to make it easier to make ends meet and pay off your debts?
• How much new money would you like to set aside?

Once you’ve determined this, you can adjust your spending and saving habits accordingly.

2. You’ll be able to carry out your projects more efficiently

Do you have a project or dream that you’d really like to accomplish, but never manage to save up for? A budget can help you do just that!

This tool makes it easy to set financial goals, plan periodic payments (weekly or monthly, for example) to reach your target amount, and track your progress in real time.

In this sense, once you know how much you earn and what your (real) mandatory monthly expenses are, have set a reasonable “pleasure” budget for leisure activities and have reduced or eliminated certain unnecessary expenses, you’ll easily see how much you can save for your short, medium and long-term projects. You can then set a target date and plan your payments to your savings accordingly.

This way, you’ll also avoid having to use credit or going into debt to make them happen!

Don’t hesitate to contact our team of financial advisors to find out how you can grow your savings with smart investments to reach your goals faster! Click here to book an appointment.

With a clear goal in mind, you’ll also be less tempted to spend on passing desires. Why buy that new pair of shoes when you could be saving that money for your future trip, wedding, cottage or retirement

3. You’ll pay off your debts more easily

Just as you can budget to save for projects that are important to you, you can also budget to pay off your debts.

By setting a goal for yourself, a date and an amount to reach, you’ll make the process even more concrete and motivating!

4. You’ll be able to create an emergency fund

Although not as exciting as carrying out your projects, creating an emergency fund is nonetheless essential! Why? Because you never know what the future will bring!

This amount is there to help you face life’s unexpected events without breaking your budget. It can cover your expenses in the event of job loss, an urgent visit to the vet, a major mechanical breakdown on your car, and so on.

To build it up, you can budget to set aside money in a separate account to gradually reach an amount equivalent to 3 to 6 months’ expenses.

To learn more about the emergency fund and our tips for setting it up, click here.

5. You’ll ensure your peace of mind

The fifth and most important reason to budget is that you may be able to say goodbye to (or at least significantly reduce) your financial stress!

It’s a lot harder to worry about your finances when you know where your dollars are going, your expenses are optimized, you’ve got cash on hand in case of emergency, and you’re gradually saving up to realize your dreams and pay off your debts, isn’t it?

What to take away?

As you’ve seen, budgeting is much more than just managing your money! It’s a real driving force towards greater financial stability and freedom.

Of course, it takes discipline and perseverance to set it up and stick to it over time. But entering a few numbers into a tracking tool at the end of the month is well worth it if it helps you accomplish your projects, don’t you think?