How Financial Management Is Crucial for Budgeting Success

Seeing your budget working can take some of the stress out of managing your money

Good Money Management Simplifies Budgeting

Whether you like to admit it or not, money plays a significant part in many of life's daily activities. When you have systems in place to manage your finances, whether that's using cash envelopes, recording your spending each time you make a purchase, or using automated software, having a plan makes it easier to monitor your budget -- and stick to it. Much of what we do in a given day revolves around finances," says Jesse Bunse, a financial planner with Triune Financial Partners, LLC in Overland Park, KS. "Whether going to the store or simply getting in the car and going to work, we are making financial decisions. Wise money management helps us to make these decisions with greater ease, thus allowing more time to do all the other activities of our daily lives."

Build Good Habits

Taking the time to make smart decisions with your money builds strong habits so that in the future, the wise decisions come easier. It may take an investment of time and effort, but you'll eventually reap the rewards. As busy as you feel now, chances are you're going to be just as busy, if not busier, in the coming years whether that involves getting married, having kids, taking on more responsibilities at work or buying (and maintaining) a home. "Putting in place simple-to-follow systems today helps wise money management to become a habit," says Bunse. "Especially for younger clients, life has a way of becoming more complicated with time. Waiting until life becomes more complicated to exercise discipline in one's finances only increases frustration and makes it more likely they will give up."

Financial Planning Goals Give Meaning to Your Budget

When you break down your budget into your monthly or even weekly spending, it's easy to lose sight of the larger goals that are motivating your budget. For example, the $100 that you budgeted for retirement savings this week might seem like a drop in the bucket. In the short term, you might rather spend it going out for a great time with friends, but it helps to remember how much that money will grow over time. "In the race between the tortoise and the hare, the tortoise always wins," notes Emerson Hartzler, director of Pro Bono with Triune Financial Partners, in Overland Park, Kansas. "Building wealth is a long term process, and money management must be done consistently. Developing the basic disciplines of money management early really pays off in the long term."

Automate Your Planning

You can give your habits a boost by using automated financial management wherever possible to track your budget and spending. Using automatic transfers to your savings accounts, retirement accounts and emergency funds can keep you on track toward your goals. Plus, using software or other electronic tools to track your spending lets you easily track how closely you're following your budget. "Even clients with more complex financial lives can benefit greatly from seeing what they are spending," says Bunse. And, keeping close tabs on your finances isn't just for newbies. "Most people who are older and have 'margin' in their financial lives tend to get away from the basics -- tracking spending against a budget monthly, etc. -- which they do at their own peril," cautions Hartzler. "It is amazing how much wealth can 'disappear' if you are not paying attention."