Smart Reasons to Budget

“Budget” is one of those words like “diet” that immediately makes most people think of a straight and possibly boring path which should be taken for their own good.  While budgeting may not be immediately appealing as a way to spend your time, there are reasons why it could be smart to set and stick to a budget – after all, it’s your money we’re talking about.  The following are some of those reasons.

1.   Security

Life is uncertain.  The last few years have shown most of the world that things can change very quickly and not always in a good way.  So it makes sense to budget your money to allow for rainy days, illness, loss of your job or the next dip in the stock market.

2.   Self Discipline

Budgeting your money can give you a greater sense of control.  When you actually plan and track your income and expenditure, you get a far better idea of where your money goes and the saving and spending habits that might need improvement.

3.   Covering the Basics

Everyone has fixed living expenses such as rent, food and utilities.  Setting aside a portion of your income for these before you do any discretionary spending is a smart idea.

4.   Planning for the Future

Budgeting your money enables you to plan for the future.  Maybe that future holds marriage, children, purchasing a house or retirement plans. It could be that you have a dream that requires cash to make it come true: a long vacation, starting your own business or perhaps just the time to write that best-selling novel.  A future where you have cash to spare is a lot brighter than one where you are wondering where your next dollar is coming from.

5.   Tax Considerations

While your employer may arrange for payment of the appropriate amount of tax, it is still wise to budget for any additional amounts you might have to pay, such as tax on income from investments or in cases where your job involves extra items such as tips.  The government is usually unwilling to wait when you own them money, it’s good to be prepared.

6.    Controlling your Spending

As Charles Dickens observed in David Copperfield: “Annual income twenty pounds, annual expenditure nineteen six, result happiness.  Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery.”  Being able to resist spending money you don’t have is a life skill worth practicing.

7.    Savings and Investments

Budgeting to allow for some savings, whether the money goes in the bank or towards other investments, means that in the future you can allocate larger amounts of money in your budget to the areas of your life that are of the greatest importance.

For further information on setting a budget and free budgeting tools, see, and how to make a budget, or do your own search on budgets.  When you really think about it, there are lots of smart reasons for budgeting your income and the results make the effort worthwhile.