In one of my earlier articles, I talked about the importance of having a budget, especially at the beginning of each year, just like you have new year resolutions. It is, however, no news, that a great majority of us do not keep to our new year resolutions. In the same way, many people do not stick to their budgets, either because of lack of commitment or lack of financial disciple. Whatever the reason, there are many benefits in making and sticking to a budget.
Time Well Spent
Making a budget takes time and effort to gather the required data and make the necessary projections and estimates. Therefore, by not sticking to your budget, you have wasted the time spent in making the budget in the first place.
Reduce or Eliminate Debts
Debts are a financial drag, and according to the Richest Man in Babylon, when you spend your money paying off debts and buying stuff, without saving any, you end up paying others but leaving nothing for yourself. Sticking to your budget helps you to live within your financial means and therefore helps you not only to pay off your debts but also ensure that you do not create more debts. I do not know if it gives you joy, but I derive so much joy and motivation each month seeing that my debts are shrinking month by month as I walk my way gradually and methodically to financial freedom.
Build Savings
As I opined above that when you spend your money paying off debts and buying stuff without saving, you end up stuffing other peoples’ pockets while yours goes empty. By budgeting and sticking to your budget, you discover ways to save or set money aside that can be invested in ways that will give you a greater return, either now or in the future. As you cultivate and maintain this habit of saving, by sticking to your budget, you give yourself the gift of greater financial security.
[READ FURTHER: ICAN’s President has some misgivings about the 2019 budget]
Expense Control
By sticking to your budget, you shield yourself from impulsive buying. Having and living within your budget helps you make educated financial decisions. When you stick to your budget, you learn to differentiate between those expenses that will lead you astray from your agreed financial plan and those that are worthwhile.
It also helps guide you against spending more than you can afford. Buying can be impulsive and emotional, but when we stick to our budget, we put a check on those impulses and emotions. That impulse and emotion almost got me recently. I asked some people to send me quotations for toilet wares for my new house and lo and behold, this lady sent me a beautiful gold-plated water closet (WC). The look was so enticing that I imagined what people would say when they come to my house and see that I have a gold-plated toilet.
I began to bargain for the price and it came to N155,000 each. While I was at the point of paying, a voice asked me, how much did you budget for this? then I paused, opened my computer and discovered that I had budgeted N65,000 for each WC. That would have been an extra-budgetary expense of N90,000 multiplied by the number of toilets in the house.
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Without boring you with what happened next, that is how budgeting and sticking to our budgets can help up save money and control expenses. And it helped me.
The Bottom Line
It is all about commitment. When making a budget, resolve at that point to stick to it. A budget is only a piece of document, it can only deliver results when followed consistently. Straying from your financial plans as contained in your budgets will only prolong the time it takes to achieve such a financial goal. Remind yourself of the motivations that prompted you to make the budgets each time you are tempted to overstep the boundaries of the budget. One thing is sure, you will be tempted to, just like I was with a gold-plated water closet of a toilet.
