Why You Should Follow a Budget

Is budgeting the key to get ahead financially? In this video I’ll tell you what budgeting is and why you should follow one!

Today I want to do two things. I want to first explain what budgeting is and then I want to convince you why budgeting is important. When I was planning this video, I put a poll out on our Instagram page asking people if they thought budgeting was important and every single person who voted in the poll said yes, so I know that is a video topic that you want to see.

So, what is a budget? Essentially, a budget is a plan for how your income will be used. We have things in our lives like rent or mortgage payments, maybe you are making car payments, you need to eat, pay medical bills, or you want to take a vacation. Some of these are needs and some of these are wants, but they all cost money. There are many different types of budgets you can follow. You can follow one that has been detailed in a book, or YouTube video, or maybe you want to create your own budget that is specific and tailored to your life and your needs. Budgets can also last for a short-period like a few weeks or months, and they can also last for a long-period like a few years or some people even follow the same budget for decades.

Now that you know what a budget is, why is having a budget important to developing your strong financial game? To me it comes down to one word, and that is a PLAN. You have a strategic, specific, and purposeful plan that you will follow with your money and make that money go as far as it can. I love the saying “IF YOU FAIL TO PLAN, YOU PLAN TO FAIL…” and that definitely applies to your finances — think about that for a second… If you don’t have a plan to how you are going to spend your money to meet your needs and your wants, then you could end up like 30% of Americans who are “STRESSED OUT ABOUT MONEY” as a survey in March of this year pointed out. Because you have a plan to how you will spend your money, it does a few very important things:

• Budgets help you stay focused on what you want. When I created my budget, I asked myself what my life goals were and how my finances tied into them. Asking myself this question forced me to keep my budget simple and every part of it has its purpose in the overall scheme. For example, I want to be able to provide for a family some day, so I am now in the mindset of providing for a wife and kids rather than just myself even though I’m not married yet and I don’t have any kids.
• Budgets also show you where you are spending your money, rather than just guessing or not knowing where and how you are spending it. You know what your income is, and how to split up the money going out in order to make sure your needs (and maybe others’ needs) are met. This transparency of your budget could lead to better understanding of your money and you can communicate this to your family or significant other, if you need to.
• Budgets can stop you from overspending. If you have a designated dollar amount of your income going towards something like “100 dollars per month on personal development” you know that if you’ve spent $75 on a gym membership and $25 on books then the membership at that new yoga studio that just opened up will have to wait until next month, or you should re-shift how you are spending that money. Overspending is a big issue for many of us, and can lead to a lot of stress financially, physically, and in other ways down the road.
• These are only three of the reasons why I think you should follow a budget to get ahead of your finances. I encourage you to look more into different types of budgets and other ways that budgeting helps strengthen your financial game. For me, I started looking at how I could use my money better at the beginning of this year and it lead to me developing a budget of my own that I am currently writing an ebook and planning a series of videos I can put out on this channel that will share with you the budget that I’ve been using to get ahead of my finances and could help you do the same. Those resources will be out by the end of this month, so if you want to see those please click the subscribe button and tap the bell to be notified when a new video comes out.

I really hope that this video gave you a better idea of what budgeting is and a few of the reasons following one is important. Do you follow a budget? Let me know in the comments below and let’s start a conversation.

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