So, What makes a Budget so Useful?

A budget actually puts you in control of your finances, rather than you being led along by your spending. At any time you know how your money is being spent - because you have a financial plan. You can make adjustments to suit any changing circumstances and plan ahead because you know exactly where you stand financially.. 

Do you actually know how you spent last month's earnings? The big bills like mortgage, gas, electricity and food you might have a reasonable guess on, but how did you spend the rest? So much money is spent on trivial items, often bought casually, that together they can mount up to a considerable sum. Significant enough to help reduce your borrowings.

When you implement and execute a properly thought through budget, you can identify where cost savings can be made, and put the money to better use. Like reducing your borrowings, for example.

An interesting side effect to working to a budget, is the improvement you will feel in your mental health, and the strength of your relationships - either with a spouse, significant other, parents or children. Worrying about money, about how you will pay important bills, can cause immense stress, not just to yourself, but to those closest to you.

All too often, the impact of stress is not fully appreciated until relationships get damaged or fall apart. When you work to a financial plan you eliminate the stress because you and your family are all pulling together.

Working to, and within a budget isn't automatically going to get you out of debt - certainly not overnight - but it will discipline you to live within your means. Failure to do this - to spend no more than you earn -  is what creates most debt problems. Some people are blind to the fact that they’re living beyond their means. Others just plain don't want to acknowledge it. This is when debt becomes an unmanageable burden, and far too often it becomes overwhelming.  You can overspend for a while, but sooner or later it catches up with you, and that leads to debt issues, and in extreme cases, financial ruin.

An intelligent budget ensures that you live within your means, and prevents you from adopting a lifestyle you can't afford. It requires willpower, of course. There's little point in making a budget if you don't try to keep to it. But if you do stay within your budget, you will initially stabilise your financial situation, then begin to reduce your borrowings until eventually you will have money saved instead of money owed. And that gives you a nice warm feeling inside.

There are no disadvantages in making a budget and I've only covered the main benefits here, but if you take a little time to analyze your income and expenditure, your assets and your liabilities and then adopt a sensible approach to your spending, you can make debt problems a thing of the past.