What Does Budgeting Teach You? 5 Important Lessons (2024)

Over the last few years, I have learned — and been taught — a lot about budgeting. Between books, blogs, podcasts, radio shows and YouTube videos, I have pretty much immersed myself in it. But here’s the thing, you can only learn so much from other people. Eventually, you need to learn by doing. And that’s why getting in the habit of budgeting can teach you so much. So, what does budgeting teach you?

Most obviously, budgeting teaches you self-discipline, frugality, how to save more money, and how to take control of your spending. But, more importantly, budgeting teaches you to focus on your future, keep a level head, and make educated financial decisions that benefit your long-term goals.

There are many valuable things you can learn from sitting down with your budget. So, for the rest of this article, I want to highlight five of the most important lessons budgeting can teach you.

Let’s get started.

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You Can Live On Less Than You Think

One of the first things budgeting will teach you when you start to religiously plan and track your spending, is that you can live on much less money than you think.

I mean, without a budget, it’s extremely difficult to monitor your spending habits and uncover areas of waste. So, in turn, wasteful spending just creeps its way into your life. Then, over time, your spending inflates, and you slowly get used to overspending. Eventually, you may even end up feeling like you don’t make enough money to maintain your current lifestyle.

Well, budgeting brings you back down to earth, shows you the areas in your financial life that can use a tune-up, and teaches you to live on less. And the best part is that it happens quickly.

I can almost guarantee that if you start budgeting today, and really analyze your financial habits, you will find plenty of expenses you can cut.

Debt Is Harmful

I learned this lesson the hard way.

Debt was one of the reasons I started budgeting in the first place. Though, it wasn’t until I started budgeting that I realized how harmful debt actually was on my financial life.

You see, before I created my first budget, I knew my wife and I were paying a lot of different monthly debt payments. The problem was that all my financial decisions were based on monthly cash flow. In other words, if I could afford the payment, that meant I could afford it. And since I didn’t have to make all my payments on the same day each month, I could spread the financial burden across the entire month — which didn’t hurt quite as bad; or so I thought.

Well, with budgeting, I couldn’t hide behind this false reality of cash flow I had created in my mind. Seriously, the first time I sat down and added up all my monthly debt payments, I wanted to vomit. Between my wife and I, we were spending almost $1,000 per month on debt. Can you say, bad decision-making?

Anyway, budgeting opened my eyes to the fact that if my wife and I hadn’t chosen to take on any debt, we would be able to save an additional $12,000 per year. This was a difficult lesson to learn, but I’m glad I learned it when I did.

If only I had taken up budgeting a few years earlier, I could have saved myself a lot of financial hardship.

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Be Intentional With Your Finances

One of the best lessons budgeting can teach you, is that the more intentional you are about improving your financial situation, the better it will get. I know, because for many years, I was just flying by the seat of my pants when it came to money.

I would save a little money here and there, and dabble in investing, but I never really did anything on purpose. Whether or not my financial situation improved was just a symptom of my spending that particular month. To put it plainly, my savings were dismal and my net worth was less than zero. Ouch.

Budgeting turned all that around.

For instance, when my wife and I created our original budget, we set a number of financial goals. Then, we used our budget to reverse engineer them. From getting out of debt to saving for a house, for the first time ever, we gave our financial behavior a purpose.

Now, in order to achieve our goals, all we have to do is stick to our budget. It’s as simple as that.

So, if you feel like your financial situation is lacking purpose, I can’t encourage you enough to start budgeting. If you do, I am confident that you will learn what it means to operate your finances with intentionality. And when you do that, you will watch your net worth grow faster than ever.

Prepare For Unexpected Expenses

The more you stick with your budget, the more accurate, and easier to maintain it will become. Seriously, over time, you can cut expenses so that you don’t have an ounce of financial fat in your life. Beyond that, you can maximize your savings, start investing, and turn your budget into a well-oiled machine.

However, the more you budget, the more you will come to understand one important thing: unexpected expenses happen a lot. On top of that, they have a way of cropping up at the worst possible times.

Whether you just got hit with a medical bill after visiting the emergency room, or you forgot that you needed to order new contacts this month (ahem, sorry Honey) you should always have an emergency fund, and a little bit of miscellaneous savings to protect you from the financial pain of unexpected expenses.

There’s nothing like entering a surprise bill into your budget to drive the point home that you need to prepare for unexpected expenses.

Financial Boundaries

Honestly, this may be the most difficult financial lesson for most people to learn. If nothing else, budgeting teaches you financial boundaries.

You see, good budgeting means knowing exactly how much you can — and cannot — spend. So, when you live on a budget, it’s easy to determine the things you can say ‘yes’ to spending money on, and the times you need to say ‘no’.

For example, if you are working on getting out of debt, and you know that you have $100 left in your food and beverage budget for the remaining two weeks in the month, then going out for drinks with your coworkers is probably a bad idea.

Meanwhile, if your friends invite you to a baseball game, and you have just enough fun money for the ticket, you can go right ahead. Just operate within your boundaries and don’t buy an $11 hot dog when you’re there.

Financial boundaries are a key principle of sound personal finance, and budgeting will teach you all about them.

Final Thoughts

From understanding the harmful nature of debt on your finances, to the benefits of preparing for emergencies, budgeting can teach you a number of really important things. And if you have the self-discipline to stick with it, you will be amazed at how these little lessons will benefit your long-term financial health.

Now, get out there and start budgeting. There is a lot to learn.

What has budgeting taught you? Be sure to comment below.

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