Why Budget? (Part 5): Budget Gives an Immediate Raise

In this short series, I have been sharing five reasons why creating a budget is important and a key factor in achieving your financial goals. Here are the other articles in the series if you need to catch up.

Reason #1: Budgeting Confronts Bad Habits

Reason #2: Budgeting Makes You Responsible

Reason #3: Budgeting Puts You in Control

Reason #4: Budgeting Releases the Power of Writing Things Down

Reason #5: Budgeting Gives You an Immediate Raise

Believe it or not, creating a budget may leave you with the feeling that you just got a raise. Now that you’ve confronted your bad spending habits and hopefully vowed to eliminate them, you all of a sudden have a lot more money to work with to reach your real goals.

How do you “get a raise” if you aren’t literally making more money?

1. You know how much you are bringing home and you’ve already planned your “necessities” spending. You’d be surprised at the number of people who couldn’t tell you without hesitation how much money they make each year or even each month. On top of that, many people don’t even know exactly how much their total priority expenses (housing, utilities, gas, insurance, food/grocery, etc.) are each month. Once you subtract the priority items from how much you bring home, you’ll have what is called “discretionary” or “disposable” income left to do as you please. Simply being aware of your situation provides you with some insight to make it better.
2. You have cut the fat from your budget. Remember the list of bad habits you listed in Part 1? Still getting that latte everyday? Still paying for that gym membership you don’t use? When is the last time you’ve shopped auto insurance policies? Still eating out too much? Hopefully you have taken a look at your goals and put that against what you’re actually doing in order to see if those habits are hindering your progress.
3. You will find ways to save money on this items you purchase everyday. Once you start to taste a small bit of success, you will become very excited about continuing your progress and accelerating your progress. One way to do that is to find ways to spend less on the items and services you use everyday. For example, you may initially plan to budget $100 per week for groceries, but now you seek out ways to reduce that to $80 a week, saving you $80 each month. You may discover that your job has a corporate wellness program through the gym you use, which could provide a better monthly rate than want you are paying now. These kind of reductions in spending will only increase the amount of money that you need to save in order to get out of debt, save for a house, save for retirement, etc.

So, I hope that this introductory series on Budget Maxer has motivated you to take action to reach your financial goals. My motivation will always be to teach you ways to spend your money wisely and to teach you have to save money on the purchases you make everyday. Thank you for visiting my blog, and I hope that you stick around for all of the wonderful tips you will receive in the future.

Question: Did you feel like you had a “raise” when you started to become aware of your income and expenses?