One Money Tactic To Solve Many Problems

Living on a budget can feel overwhelming in the beginning, but it won’t be long before you reap some unexpected benefits. When I first sit down with a client, it is not uncommon for them to say things like:

“My credit isn’t good.” “I am unorganized.” “Money makes me nervous.” “I don’t know where my money is going.”

You want to know the secret exercise to solving these problems? Well, if you have been reading my blog you know it is not much of a secret. Budgets! Budgets will help with these concerns plus more.

The beauty of a good budget is it solves some of your personal downfalls, while being livable. Creating a livable budget that helps you accomplish your goals isn’t easy, but the learning curve is worth the time. Someone like me who loves numbers, gets excited to put the puzzle together for people. But the puzzle will not work without your committed to follow through with the steps.

Here is a list of unexpected side effects from living on a budget:

1. Your credit fixes itself- Most people come to me concerned about their credit score. I know the feeling. Before I started paying off my debt, my credit score dropped significantly. It was a secret I held to myself until I figured out the key. Two of the major impacts on your credit score are credit utilization and payment timeliness. Once you live on a budget, you will no longer be a few days behind on your payments. If you do your budget right, you will pay down your balance decreasing your credit utilization. Every client I have that sticks to their budget sees an increase in their credit scores within a matter of months.

2. You know how much money you have in the bank at all times- If you are someone that doesn’t know how much money you have in the bank, that will change automatically after a couple months of living on a budget. This is very important. Living on a budget prevents overdrafts, anxiety about insufficient funds to float you to next payday, and unnecessary spending. You make better use of the money you have in the account. When money sits in your account without a plan, it is easy for is to disappear. Think about the times when you had an unplanned night out or Amazon shopping spree from boredom.

3. You get organized- If you feel disorganized and don’t know where to start, a budget can be the guide to extreme financial organization. I get complimented often that I am very organized. I am proud to have that as a part of my character, because I had to work at it. I remember feeling disorganized and letting things slip past me. Living on a budget has allowed me to hone my financial system. I never miss a payment, save monthly, and hit financial goals yearly. The budget was the key.

4. Excessive spending decreases- Budgets are an accountability tool. When you must check in with yourself and have financial goals spelled out, it becomes harder to veer off track. I now know when I overspend, I am not only spending too much; I am decreasing my chances of hitting my financial goals. Having my budget as an accountability tool stops me and causes me to reflect when spending doesn’t benefit me.

5. Financial goals come into alignment- The longer you live on a good budget, the easier it is to hit your financial goals. No more New Year’s Eve Resolutions about money that end up on the same list next year, because you didn’t accomplish them. A budget should not only outline your current situation but also your future goals. Commitment is the key. My favorite client calls are when someone has been on their plan for a couple months and they paid off a debt, bought a car in cash or accomplished another major goal that was based on a longer-term plan.

6. Increased Savings- If you ever feel you do not have enough in savings, you are not alone. Seeing all of your numbers on one page will change your financial reality. You will notice things like, paying for things monthly that you don’t use, your paycheck not being as high as you thought, and high amounts for services that should be lower, based on industry standards. Most of all, you will see how much money you should have left over at the end of every month. As one client said to me two months ago, “Well, where is all that money going every month?” After a week of reflection, she realized she was spending daily on eating out, partying, and shopping. Knowing that simple changes can leave more money in your savings every month is an empowering feeling. What is more comforting? Seeing your saving increase month after month. A growing savings is a financial safety net.

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