Benefits of Budgeting

Lately, I've been trying to convince a close friend of mine of the benefits of keeping a personal budget. So far, she's not entirely convinced. Or rather, I think that her better half remains unswayed. Of course, extolling the virtues of a budget makes me consider why, exactly, I think it's so important.

For me, not budgeting is not an option. Call it a personality trait/quirk/flaw/what-have-you, but I feel a very strong need to be as in-control of my little corner of the universe as possible. The files in my home filing cabinet are color-coded. I have spreadsheets to track my calories, my running, my to-do list, my Christmas card and present lists, and—of course—my spending. The budget is such an easy area to track, for my personality type NOT tracking it is really not an option.

But let's say you're more laid-back. You can more readily go with the flow and see where the wind takes you. (Meanwhile I have checked the weather forecast, saw that it would be a windy day, and dressed/planned accordingly.) Why should you budget?

In my opinion, as a natural-born saver, the main benefit to budgeting is the difference between knowing and not-knowing. This particular person's argument is that, as a couple, they spend very little. Their default mode is saving; therefore, if they budgeted, they wouldn't be saving any more than they currently are.

Let's give them the benefit of the doubt and say this is true. (I know it wouldn't be for me. I may have a tendency towards saving, but we all have our weaknesses. Mine are books and fancy coffee drinks.) The only benefit in this case to budgeting would be that you know how much you're saving. You know that every month, you're putting $x towards your emergency fund, $y goes towards your vacation/Christmas spending, and $z is funneling into retirement. Or however you choose to break out your savings categories.

You know that, if a minor emergency such as a car breakdown happens, you can cover it. You know that you'll need to replace your roof in a few years, and when you get to that point, you'll already have enough money saved to pay for the new roof in cash. You know that, if you continue saving at this rate, you'll be able to live your chosen lifestyle in retirement. You know that, if you want to have kids, one of you can stay home and you'll have enough money to cover your costs.

All of this knowledge is very important to me. This knowledge—and the fact that we do have money put away for a rainy day—helps me sleep at night. Without knowing exactly where we stand, financially, I would be so stressed out that I don't think I could function.

So, completely independent of any benefits gained from budgeting related to increased savings, just this knowledge alone is worth the relatively small amount of time I spend every month on keeping my budget up-to-date. Is it worth it to you?