The Pros And Cons Of Budgeting
There are pros and cons to everything we do. Meaning there’s an advantage and a disadvantage to everything.
If you go to college, the pros are you’re better educated and more qualified for a better job than if you hadn’t gone. The cons of college are that it’s expensive and requires a lot of work.
Budgeting is no exception. There are advantages and disadvantages to budgeting. The pros and cons of budgeting. The pros of budgeting are you are financially stronger than if you don’t budget. One of the cons is it requires time and effort.
So far, I’ve given you one pro and con for budgeting your money. Let’s take a deep dive into the advantages and disadvantages of budgeting.
Advantages Of Budgeting
Having a budget gives you control over your money. You know where you spent your money and on what.
Not having a budget is like not keeping a score while playing a game. You don’t know your status or how you are doing. You have no way to measure your success or shortcomings.
Have you ever forgotten to pay a bill? That’s only one example of your finances being out of control. There are others.
When you make a budget, you are making a financial plan, making it easier to track your money and spending. It makes it easier for you to be in charge of your money.
When people talk about budgets, they should also include spending journals. A budget tells you where you want your money to go, but a spending journal tells you where your money really went.
A spending journal is a log you keep track of your spending.
The information you need to include in your spending journal is the date, the item you bought, the amount of the item, the category, and the method of payment.
Using a spending journal and a budget together makes budgeting easier. Your spending journal makes finding waste easier.
Using the budget and spending journal makes it easier to understand your spending habits.
Stops You From Living Above Your Means
I cringe when people say a budget will help you live within your means. They make it sound like this piece of paper has power and won’t allow you to exceed your budget.
The truth is you control your money. Why have a budget? If you use a budget and spending journal daily, you will know what bills need to be paid and when. And you’ll know when you are getting close to the edge. And you will decide to exceed the amount allotted or to continue to live within the guidelines of your budget.
After you have a budget in place and use it with your spending journal, you’ll make better-informed decisions.
Budgeting Prevents Financial Stress
After you have taken the time to create a budget and you are actively engaged with your budget, You know how much money you’ll need to have to take care of your obligations, short and long-range plans, and how much you have to spend for everyday living.
You should use your spending journal daily and update your budget daily to have the latest information at any given moment. This keeps you engaged with your finances.
Prepares You For Emergencies
The thing about emergencies is we never know when the next emergency will occur or what it will be. In most cases, the emergency is the lack of funds to handle the cost of an unplanned event. A primary consideration when contemplating the advantages to the disadvantages of budgeting vs. not budgeting is the short and long-term effects of the lack of funds to deal with unplanned events.
The pros of budgeting are you will be better prepared to deal with unexpected expenses that affect your needs, food, a place to live, clothing, ability to work, and more.
The cons of budgeting are it will take time and effort. Another con is if you budget and live by your budget, there will be times you will need to turn down opportunities for things you want. Like that mini vacation or night out with friends.
When you have emergencies covered, it makes it easier to work toward your short and long-term goals because you do not have to have to dip into your goals finances to afford to pay for the unplanned expenditures.
When considering the advantages and disadvantages of budgeting, you need to consider the importance of your goals. Think of an emergency fund as money that, because you have it, will allow you to accomplish your goals that you wouldn’t usually be able to accomplish because of unplanned events or emergencies.
Save For Something Big
Most people, at one time or another, choose to save for something big like a TV, car, new house, or something else.
If you have a good budget in place and you use it, the job of saving for something big is easier.
Advantages And Disadvantages Of Budgeting You Should Know
Pros And Cons Of Budgeting
There are pros and cons to budgeting.
Yes, there are some disadvantages to budgeting, but do they outweigh the advantages?
Some people love budgeting for the benefits of budgeting, and others detest budgeting for several reasons. Usually, the reason people don’t like to budget is they don’t understand how a budget can benefit them, or they have misconceptions about budgeting.
Disadvantages Of Budgeting
There are many misconceptions about budgeting. Budgeting isn’t always easy for beginners or those who don’t do it regularly. But with time and practice, you can master your budget.
Difficulty Finding A Budgeting Method That Works For You
When comparing the pros and cons of budgeting, many people reject budgeting because they have yet to find a system that works for them. With all of the different types of budgets, it’s easy to understand why this happens, but because of the advantages of budgeting, you should look for a system that works for them.
Some budgeting methods, such as the 70-20-10, zero-based budget, 30-30-30-10, reverse budgeting, etc., are worth considering and exploring. Try one. If you don’t like it try another until you find one that works for you. If necessary, make some adjustments. Tailor it to your needs to make it work for you.
I use the 50, 30, 10 budgets. The numbers represent the following categories in order Needs, Wants, Savings, and debt payment. The adjustment I make is I use sinking funds.
You may have saved up to buy something. After you had the money, you bought the item. That’s an example of a sinking fund.
Maybe You Think It’s Too Rigid
Many people think of budgeting as something that limits them and their lives and holds them back.
Nothing is further from the truth. A budget is a liberating tool that will empower you to have your best life because you are spending money on the things that are important to you and not getting caught up in money leaks.
Money leaks are where you spend money that doesn’t help you reach your goals. in most cases, if you think about it, you don’t even want it.
Think about your gym membership. when was the last time you used it? Do you still pay for it?
Or magazine subscriptions. Do you still read them?
It’s your money. Make it work for you.
Budgeting Requires Time And Effort
Creating a budget can be time-consuming. At least in the beginning, it will take time to locate pay stubs and receipts and make a budget you can live with. This sometimes takes a lot of time, and you may need to start over. Yes, it’s a work in progress. But when you have found a budget that works for you, it becomes much more manageable.
You May Not Like Change
Budgeting will improve your finances because you will know where your money is going and for what.
You will be able to recognize waste and prevent that waste in the future easily.
Not everyone deals with change in a positive manner. In fact, most people resist making changes. It’s more challenging to use a budget and save money and redirect money to things that are important to you when you are resisting change.
You can make this easier by focusing on the benefits of a budget.
If you resist change but still see the benefits of budgeting, it will be important for you to be determined to budget and make the necessary changes that need to be made.
If you welcome, change is good for you. Budgeting will be much easier for you.
Improve Your Finances And Start Budgeting
Yes, there are some disadvantages to budgeting. But when you consider the pros and cons of budgeting, it’s easy to see why budgeting makes sense.
After you find a system that works best for you and use that system, you will improve your finances.
Conclusion
The Pros And Cons Of Budgeting. There are many advantages to budgeting, and there are some disadvantages to budgeting. after weighing each, it’s easy to see budgeting makes sense.