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The unintended benefits of living on a budget

We all hear about the financial advantages of budgets and why everyone in the world should have one, but rarely do people talk about the non-financial benefits of living on a budget.

Yes, beyond helping you to better manage your money, tackle your debts and keeping you focused on your financial goals, living on a budget also has many other, somewhat, unintended benefits — mainly for your mental health, your family and your social life.

Yes, budgets are about much more than just money.

It reduces stress, reduces risk

Finances are still one of the leading causes of divorce and marital stress. But even if you’re not married, bad money management can wreak havoc on your life. But good money management has the complete opposite effect — you’re no longer having to stress about money. After years of budgeting, I know immediately what’s coming in, what’s going out, and what we, as a family, can and cannot afford — no more guessing. And it doesn’t need to be complicated. We’ve automated all of our savings and the majority of our bills, so our budget is working for us, even while we sleep.

But probably most importantly, we’re sleeping soundly knowing that in the event of an emergency or a job loss, me and my family would be protected, because our budget has allowed us to set money aside for those emergencies.

It helps to teach your kids about financial responsibility

If you think about the kind of havoc bad money habits can wreak on your life, both financially and emotionally, think about what it can do to your child’s. If you have children of your own, budgeting itself may not be the only solution, but opening the discussion about money teaches them that it’s not something they need to be afraid of. By allowing them to create their own small budgets to plan for, say, your next road trip or their birthday party, they can start to see the value of everything you buy. Maybe even allow them to budget a small allowance that they can use as spending money on the road trip, as a small reward for creating a budget. After all, budgets should be fun and rewarding!

Although my kids are still young, I’ve noticed my 2-year old daughter is already picking up on my shopping habits — which is a good thing. Remember, actions speak louder than words and developing good habits from the beginning are hopefully habits that they will learn to carry on for the rest of their lives.

It improves communication

Discussing money and finances with family still remains a taboo subject for many. A recent survey by Merrill Lynch found that 56% of parents over the age of 50, have not yet discussed any key financial issues with their children. (Yet, strangely, it seems parents today are much less likely to have problems discussing politics, religion and other seemingly more sensitive issues).

Good communication is key to any successful relationship and a happy home life. So having money conversations with one another not only helps to break down money-related communication barriers, but I would argue it improves communication across the board. Unless you’re living on your own, budgeting should be a team effort. Working with your partner to set goals together, budgeting helps you understand not only where your money is going, but what you want that money to do for you. Where do you want to be 15, 10, 5, even one year from now? A budget helps you set a plan in place to get there.

It shows you what’s possible

Once you knock down your first money hurdles, there’s no stopping you. Whether it’s paying down your first debt, or saving up for that vacation you always wanted, it’s extra fuel, extra motivation, to move ahead to tackle your other dream goals. You’re not constantly stuck in that ‘I can’t afford it’ mindset. And you’re learning to exchange bad money habits for good ones.

Many immediately discount budgets as being hard to stick to and complicated, no fun, restrictive, or taking too much time. Well, they can be all or none of those things. It’s truly whatever you make them out to be. We’ve chosen to create a budget that’s none of those things, and we’re happy to report that we’re better off financially, we don’t stress about money, have a healthy marriage, and are confident in knowing that we have to the tools to teach our kids to live to be financially responsible. And that’s freedom.

These are just a handful of the benefits of living on a budget that immediately came to mind. I’m sure you can think of countless others. For those of you that are living on a budget, can you identify any other unintended benefits you see? And for those of you that haven’t subscribed to my mailing list yet, sign up today!

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