If you’re wondering: “do I need a budget?”, the answer is yes, yes, a big, huge yeees! Financial planning is the first step to take if you wish to have control over your life and expenses as an adult, and, if you do it as a teenager it is even better. If you want to start financial planning, the first thing you need to do is, of course, coming up with the strategy through which you’re going to accomplish this goal. In finance, people do this with budgets: plans you write down to decide how you will spend your money each month. In this article, I am going to show you what are the reasons why you should start a budget.

First and foremost, as a research paper from the Nobel prize-winning economist Richard Thaler proves, most people are not fully aware of how much money they are spending monthly. Most importantly, Thaler showed that humans tend to discount small daily expenses (e.g., coffee, delivery fees, streaming services, etc…) and often fail to account how much these payments can add up over time. Keeping truck of these costs is therefore fundamental to accurately perceive our outlays and avoid that feeling most of us have experienced that you’re not working hard enough to save a fair amount of money for the future and for emergencies.

Knowing how impactful every choice you make is, after starting your personal budgeting plan you will inevitably save more money as well. Doing so is of extreme importance as you could need a bigger amount of money at any moment: emergencies are always around the corner! In fact, this type of cost can strike you anytime, and if you’re not well prepared, you’re likely to be caught off guard. A budget both protects you for the big fun expenses such as a family trip, but also, and most importantly for the unpredictable ones such as a broken car.

And there’s more: a good and efficient budget is going to benefit you in other ways as well. Specifically, it will make achieving your goals – even the ones that are not related to your finances – a lot easier. The approach you’re going to have towards your salary and expenses is going to affect almost every other aspect of your personal life, ultimately improving it.

In addition, thanks to a budgeting plan, you’ll have other advantages: long term financial security, reduced financial stress and better debt management are just some of them.

Overall, budgeting is an essential tool for those who are looking to take control over their finances. It helps you solving many financial problems such as the tendency to spend too much, to loose track of one’s expenses and also to feel overwhelmed by an inefficient financial planning method.