Budgeting is the process of creating a plan to spend your money. The spending plan is called a budget.

A budget is simply a spending plan that takes into account both current and future income and expenses.

Creating the spending plan allows you to determine in advance whether you will have enough money to do the things you need to do or would like to do.

Budgeting is simply balancing your expenses with your income.

Since budgeting allows you to create a spending plan for your money, it ensures that you will always have enough money for the things you need and the things that are important to you.

Some of the benefits of budgeting include:

1. Helps you prepare for emergencies

Life is filled with unexpected surprises, some better than others, for example, falling ill, getting injured, losing a loved one, or getting divorce among others that result in a serious financial turmoil.

Budgeting allows you to plan to set aside money for emergency costs.

2. Regulates spending habits

By dividing your money into categories of expenditures and savings, a budget makes you aware which category of expenditure takes which portion of your money.

This forces you to take a close look at your spending habits.

Budgeting allows you to rethink your spending habits and re-focus your financial goals.

3. Keeps you focused on your money goals

A budget forces you to map out your goals, save your money, keep track of your progress, and make your dreams a reality.

Budgeting helps avoid spending unnecessarily on items and services that do not contribute to attaining your financial goals.

4. Enables you to produce extra money

Through budgeting, you get to identify and eliminate unnecessary spendings like late fees, penalties and interests.

Apparently, this small saving can add up over time.

Lastly, budgeting clearly shows you how you allocate your money and present you the choices on what stuff to enjoy based on your financial limitations.

It will also save you the grief of overspending and being too much in debt.

Budgeting is said to be the first step to financial freedom.