Managing our finances is like embarking on an adventure with the destination being achieving our financial goals. But every journey requires a map. In this case, our map is a budget. As American author and speaker, John Maxwell’s widely quoted perspective on budgeting reads, “A budget is telling your money where to go instead of wondering where it went.”
When money flows in, it becomes essential to mark where it is headed on our budget map. It may flow into savings or be invested for the future, or it may be allocated to minor expenses like utilities, groceries, or entertainment.
Apart from financial freedom, these maps bring peace and assurance, reducing the anxiety of financial challenges. They lay out a clear path towards our goals and empower us to embrace unexpected opportunities. This is why taking care of our financial well-being is a great way to secure our mental wellness, and budgeting is one way to take care of our financial well-being.
“Budgeting gives us the opportunity to save, build wealth, secure an emergency fund, and identify the needs that truly matter,” says Mark Stewart, certified public accountant at Step by Step Business, Massachusetts, United States.
There are several benefits that come with early budgeting.
- Builds financial discipline and resilience early on and helps us avoid overspending
- One gains more time to save and build wealth towards the future and retirement
- Instils a sense of independence and self-reliance
- One can become a mentor to people who need encouragement
- Holistic discipline that emanates from financial responsibility
Gary Hemming finance professional at ABC Finance, Birmingham, England, provides the advantages of budgeting on mental well-being
- Budgeting provides a sense of control and empowerment over one’s financial situation
- When people create and stick to a budget, they better understand their income, expenses, and financial goals. This clarity reduces financial stress and anxiety
- Knowing where your money is going and having a plan can lead to a greater sense of security and peace of mind
- Budgeting encourages responsible financial behaviour, such as saving and avoiding unnecessary debt
- These positive financial habits can lead to a more stable and predictable financial future, reducing the uncertainty that often contributes to mental health challenges
- Achieving financial goals through budgeting can boost self-esteem and confidence
