Experience these benefits of budgeting in just three months

No matter where you are on your financial journey, you can always stand to benefit from budgeting. After all, budgeting is the core of personal finance. But let’s be honest: it isn’t fun. It’s tedious, time-consuming, and — especially when you’re getting started — it can be a little embarrassing.

Nevertheless, budgeting is essential for your financial health. And there’s good news too: you can experience the benefits of budgeting in as little as three months. You’ll see (and feel) some of the benefits right after you make your first budget.

With that said, let’s explore the top 10 benefits of budgeting.

As of April 2024, nearly 30% of UK households aren’t prepared to handle a £850 surprise expense — regardless of how important it is. Surprise expenses ranging from car repairs to emergency home maintenance can push you into precarious financial positions and force you to turn to high-risk forms of credit like payday loans.

Budgeting can help you identify how much money you can afford to put into an emergency fund. You can be at ease when you’ve built an emergency fund, knowing that you have a safety net in place when things happen out of your control.

The first law of holes states that when you’re in one, you should stop digging. For many people, poor financial habits aren’t due to lack of care, but rather a lack of realisation. Many of the things we spend our hard-earned money on don’t warrant the expense.

When you create a budget and identify where your money is going, you can cut the purchases that are spreading you thin financially.

One of the best benefits of budgeting is that it gives you control over your finances. This means that when you choose to spend, you know that your purchases fit into your budget and that you won’t regret it later in the month.

Just like you can be confident in your purchases, having a budget allows you to borrow with confidence. Forms of credit like loans or credit cards can have significant consequences for your finances. For example, late or missed payments can damage your credit score, and a rolling balance on a credit card can cost you hundreds of pounds in interest over time.

When you have a budget, you can use credit products like loans and credit cards confidently, knowing what you can comfortably afford to use and repay each month.

Related read: Should you get a credit card? Ask these questions first…

Money is the most common cause of stress in UK adults, with nearly a third of reporting that they are anxious about their ability to pay their bills.

What’s the best way to eliminate or reduce that financial stress? By making a plan.

Having a budget in place won’t eliminate all of your financial stress. However, by having a plan in place and doing things like preparing for an emergency, you can eliminate many of the most common sources of financial stress.

If you’re anything like others across the UK, you’ve got debt. As of 2024, the average UK adult has £4,177 of unsecured debt. Eliminating debt can be hard, but it’s nearly impossible when you don’t have a plan for it.

Building a budget gives you a roadmap that your finances — including debt — fit into. This allows you to make a detailed plan for getting out of debt by prioritising the smallest debts, the ones with the highest interest, or any other strategy.

Related read: How to get out of debt in the UK

If you’re struggling financially each month, it can take a toll on your credit score. High credit card utilisation ratios, late payments, and debt can all damage your score. A crucial benefit of budgeting is that when you’re in control of your money, you can improve your credit score.

Understanding your incoming payments and outgoing expenses can help you prioritise payments and use credit in a healthier way. For example, paying off your credit card balance multiple times a month can help you reduce your credit utilisation ratio. Likewise, making timely payments can build your payment history, which is the most important factor contributing to your credit score.

Want to learn more about how Pave can help you build your payment history?

Everyone has financial goals. Some people might be saving for a car, others might be working on paying off their debt. Regardless of what your goals are, having a budget can help you make your priorities clearer.

Each month, you’ll be able to see how your budget is pushing you closer and closer to your goals. Plus, not only does a budget give you direction, but seeing your progress can be inspiring and help you stay on track.

Budgeting is a great way to hold yourself accountable. Whether you simply want to be proud of your own actions, or be transparent with a loved one who’s counting on you to make good financial decisions, a budget is a simple way to cultivate accountability.

Keep in mind that making a budget is a process that takes time. However, even if you don’t live up to your expectations at first, take the opportunity (alone or with someone else) to review where you went wrong and what you can improve on next month.

Whether it’s for your children or for your friends, there’s always the opportunity to be a role model for financial decisions. Children learn by example. Showing yours how to make smart money decisions — even when they’re not fun at the moment — is one of the best gifts you can give.

Alternatively, maybe your peers are also struggling financially. Imagine your friends asking if you want to join them at a restaurant. Saying, ‘Actually, I'm spread a bit thin right now. Maybe we could cook something at my place?’ not only respects your own needs, but could give a friend the confidence to make the right decision for their financial health and open the door for a healthy discussion about personal finances.

The bottom line

If your personal finances were a construction site, your budget would be the blueprints. Without them, things end up in the wrong place and you’re unstable. But with it, your personal finances will be solidly constructed and ready to stand up against any storm.

By making a budget, you can start to see these benefits — like lower stress levels, greater confidence in your financial decisions, and reduced debt — in as little as three months. So what are you waiting for? Get started making your budget today.

About Pave

Pave is one of the UK’s best credit building apps. Through credit-builder accounts, bills monitoring, and supported learning, we’ve helped hundreds of thousands of people across the UK improve their credit score and stay on top of their finances.

Pave helps boost your credit score by reporting your payment behaviour to the UK’s three major credit bureaus, including TransUnion, Equifax, and Experian. Plus, by monitoring your bank account with Pave’s Bills Alerts, you can get alerts on bills that could impact your credit score.

To get started building your credit today, download Pave from the App Store or Google Play!

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*Pave cannot guarantee an increase in your credit score. Some features are subject to approval.