15 Aug Budgeting: 5 Unexpected Benefits of Planning Ahead
The thought of a visit to Home Affairs for a passport always makes one groan, but at least the trip you’re planning makes the outing both urgent and worthwhile. What about drawing up a budget? Budgeting is important but seldom urgent, so most of us put off the process forever…
Sure, creating a budget is the first step towards controlling spending, which then allows you to save more towards your long term goals (and if you’re already successfully retired, you know that spending within your means also gives you peace of mind that your investments will last your lifetime).
But long term retirement planning is not the only benefit of budgeting, so read on for other tangible — and unexpected — benefits.
Even mundane things like money can keep you ‘in the moment’. Budgeting makes you more aware which puts small expenditures into perspective. Delicious daily coffee might be a non-negotiable, but when you tot up the cost you may decide that R992 per month could be better spent on a solid coffee machine at home instead. Throw in a quality, reusable travel mug and you can tick two boxes because you’d be saving the earth, too!
Enabling new aspirations
Being mindful of spending patterns can reveal things you’re currently paying for that you’d rather do without. Spending a lot on DSTV when you actually want to be out walking the dog more? By saving that money monthly (and getting off the couch) you can reallocate it towards something that currently seems out of reach. Yep, that seemingly extravagant holiday could fall within the budget after all.
Better relationship health
Spending can be a prickly subject between partners, but you could reclaim it for good. Clarity and communication, both so healthy for relationships, are by-products of the budgeting process, and planning together opens up conversations about short term needs and long term goals. And because you’re using concrete data as a starting point, the conversation can be centered round facts, and steer clear of perceptions and emotions.
Calm and confidence
Money matters often produce anxiety, so we avoid thinking about them. But the antidote to anxiety is action, and making a budget gives you facts on which to base your actions. Being proactive, having a plan and checking regularly that you are on track gives you a sense of control and it also improves the probability of success.
Once you know your situation and have figured out what is important to you, you can plan and act with confidence and calmly live out the life that you choose.
No nasty surprises
Planning for retirement is hard if you don’t know how much you will need to spend every month. Budgeting gives you a realistic expectation of your income needs so that you don’t find out too late that the goal you’ve been working towards was based on an inaccurate spending expectation.
Finally: relax — it’s a budget, not a target
At Netto we are all about long-term financial planning … but successful long-term planning has to start with compatible short-term behaviours. At the same time, a budget is a living thing and can change as circumstances do.
Revisit your budget and re-tweak it as necessary — just don’t let yourself off the hook for planning your retirement savings and investments. If you need help with getting the budgeting ball rolling, speak to your CERTIFIED FINANCIAL PLANNER® when you come in for your next annual review.