What is the Purpose of a budget blog by BudgetingFaithfully.com

What is the purpose of a budget?

So, what is the purpose of a budget? The purpose of a budget is to track income and spending, to reduce and/or eliminate debt, grow savings and wealth, to create a plan for spending for current and future purchases.  I like to create a yearly budget that then becomes my spending plan for the current year.  Using Excel, I use my spending plan to balance my checking account and track my spending.

Per interest.com 38% of Americans have not created a personal budget in at least 10 years or have never created one.  Also, about half (55%) of Americans are budgeting somewhat regularly (within the last 5 years) while the other half are not (45% at 5 years+).  Therefore, if your income and expenses never change and your spending is not excessive then for the 45% that took this survey, maybe a budget is not necessary.  However, I have learned that life happens and to always expect the unexpected. Here are 5 Basic purposes for a budget:

#1 Communication

Communicate the Budget - BF

A budget is a tool to communicate to you and others in your household how much income is coming in and how much income is going out.  How current money should be spent and how future income should be spent. It should be a household discussion with the heads of the household reviewing and discussing the current and future plans for the joint income.  Also, this is a great opportunity to share with age-appropriate children the virtues of budgeting and saving. Hence, one of the purposes of a budget is a communication tool that allows you to share how you will provide for yourself and your family.

#2 Coordination

Coordination of Checking and Savings - BF

A budget allows for a coordination of the funds to be allocated to a checking account to pay bills or deposited into savings accounts.  Wherever possible this should be automated. On-time payments are key to maintaining a good credit score.  And direct deposits into savings and investment accounts are key to growing wealth. To learn more about improving credit scores read How to raise your credit score 100 points in 45 days and to learn more about Wealth read Wealth Accumulation.

#3 Planning

Budgeting is Planning - BF

Another purpose of a budget is to plan how you want to spend your money. How do you plan to save for special items and or big purchases? How do you plan to save for college and retirement?  When you plan and save you are less likely to go into debt.  Therefore, you are less likely to borrow and are more likely to live within your means. You are more likely to be financially sound.  Read Being Financially Sound for what this can look like for you. 

#4 Control

Control your Spending - BF

When you budget on purpose you will know exactly how much is going towards bills, pleasure, and your future.  That is because you are in control of how your money is being spent and saved.  You are telling your money how you want it to work for you.  A budget helps you control your spending because if it is not in the budget, you shouldn’t be spending.

#5 Evaluation

Budget Evaluation - BF

The final purpose of a budget is to evaluate how you are doing.  Are you on target? Have you overspent? Can you get back on target?  Do you need to trim some expenses?  Or have you been so good this is more money for a guilty pleasure or to save?  There is nothing wrong with rewarding oneself if you have been super good.

What Is The Purpose Of A Budget But to Set Goals

We all need to set some goals.  Whether it is to buy a home, a new car, or to save for college or retirement. Financial goals help to motivate us to make these goals happen. It can encourage you to go for a promotion, a raise, or a 2nd job.  Or it can simply encourage you to give up something for something better for a short time. Such as an expensive coffee for a new pair of shoes. Financial goal setting is key to achieving all you were meant to be and own.

Budget Goals - BF

What Is The Purpose of a Budget But To Help You Get out of debt faster

Another purpose of a budget is to get out of debt.  There is nothing more freeing than saying goodbye to your lenders. Freeing up money and allowing you to have peace of mind.  Owing money requires having to work to pay off debt. It is like being a slave to the lender as I wrote about in a past blog.   Currently, 32% budget to get out of debt, and 88% of people who budget stay out of debt per debt.com. These are compelling statistics to have a budget.

Get Out of Debt Faster - BF

What Is The Purpose of a Budget But To Increase Wealth And Savings

Many people budget to increase their wealth when wealth building is part of the budgeting process. Cited in  debt.com, 37% budget to increase wealth and savings.  Budgeting is an excellent tool for building wealth.  When you plan to be rich you can become rich.  You just have to let your money work for you through saving and investing.  Other than saving for an emergency fund you should consult a certified financial planner for investment options to grow your wealth.

Increase Wealth - BF

What is the Purpose of a Budget But To Plan how to spend

65% of Americans Have No Idea How Much They Spent Last Month per mint.intuit.com. A budget would help you avoid this because you will have allocated every dollar to a specific line item.  Be it entertainment, gifts, etc.  The purpose of a budget is to have a purpose for every single dollar you earn. 62% save throughout the year for special events and holidays per debt.com. No holiday or special occasion should catch you off guard because you have purposely planned for this event. Yes, unexpected events can happen, but guess what you budgeted for an emergency fund for that.  To learn more about budgeting for an emergency fund read my blog Emergency Fund Savings.

Plan Your Spending - BF

The Purpose Of A Budget Is To Provide Peace And Financial Freedom

There is peace of mind knowing that your budget is working to make your life better.  To provide freedom from debt so that you can live your best life.  A budget is not a tool to restrict your spending but to help you spend better and more wisely.  A budget can help you eliminate waste and from making an unaffordable purchase.  It helps you live within your means and avoid debt. The budget allows you to spend freely without worry about how you plan to pay for something because you already know. It is in the budget and the budget is doing what it does on purpose.

Budgets Provide Peace - BF

Your budget Your Future

Create a Budget. Start as early as you can.  And if you are new to budgeting it is never too late to learn how to budget on purpose.  Attached is a worksheet you can use to get you started. If you prefer a digital option, I recommend the EveryDollar.com (Free)YNAB (Fee)Pocket Guard (Free)Clarity Money (Free), or Good Budget (Free) Apps to help you budget.  Your financial future depends on you to plan how every dollar you earn having a budgeted purpose.

Additional Reading

Setting Up A Budget For Beginners

Mind Over Money Budget

Let’s Budget, Spend, and Live!


Everyone also to whom God has given wealth and possessions and power to enjoy them, and to accept his lot and rejoice in his toil—this is the gift of God.

Ecclesiastes 5:19 ESV

39 thoughts on “What is the purpose of a budget?”

    1. sabrinaanthony.media

      It is a struggle for most of us. You got this. Wishing you all the best. Thanks for sharing.

    1. sabrinaanthony.media

      Glad you are budgeting. As long as you understand it. That’s all that counts. LOL Thanks for sharing.

  1. Great tips here. I think evaluation is such a great step that may get overlooked. It’s important to look back and recognize if the budget has been realistic or not!

    1. sabrinaanthony.media

      I couldn’t agree more. This will allow you to see where you are and how you can move forward. Thanks for sharing.

  2. Our pastor was just speaking on budgeting yesterday. I’ve had a budget for many years and follow it pretty closely, and boy has it helped!! It’s allowed me to give more away as well!

    1. sabrinaanthony.media

      When we are good stewards of our finances we can give more. May God continue to bless you. Thanks for sharing.

  3. Budgeting is so important for everyone and I started my children at around 10 years old with allowance and things they wanted to buy! Today as adults they all budget.. and stick to it!

  4. Our budget gives us the freedom to not have to worry about money. We always know where we stand and whether we can afford a purchase. My husband always laughs when he asks if we have the money for something he wants and I respond “yes, I already put it in the budget.”

    1. sabrinaanthony.media

      You are absolutely correct. Budgeting is freedom. Financial freedom. Love “yes, I already put it in the budget”.

  5. Oh man I am so not a budgeter. I kind of want to be but I don’t know if my spirit has it in me haha. I’m not a big spender so that helps I guess

    1. sabrinaanthony.media

      Yes, controlling your spending is key to budgeting. Change your mind and your spirit will follow. You will enjoy the freedom.

  6. I have always really appreciated that a budget does not take control away. It GIVES control and permission. I love having a budget now that I have refined mine over several years. At first, it can feel restrictive. But that changes quickly.

    1. sabrinaanthony.media

      Yes, a budget is more freeing than restrictive. Financial freedom is one of the best types of freedom. No longer a slave to your lenders. Thanks for sharing.

  7. Elizabeth Preble

    Great tips! A budget definitely gives you freedom and it’s a great way to plan for the future!

  8. I am truly lucky that my Mom drilled money management into my head as a young girl. I have never really had trouble budgeting for something I want or need… which really bodes well considering my travel addiction!!

  9. Budgeting is so helpful and we usually sit down and recalibrate once a year. I am not always the best at following through with checking if we are staying on budget though! 🙂

  10. Coming from poverty, budgeting wasn’t a thing because there wasn’t anything to budget. I had to sit and learn and discipline myself to budget when my career begun and I’m glad I did.

  11. The piece about a budget being communication really resonated with me. I think to this point I have always thought of a budget as an arduous task to get done and never really enjoyed so I never stick with it. But if you think of a budget as communication or a conversation between you and your money, then it doesn’t seem so task/checklist item type of thing and like more of a relationship. I like it. Thanks for that!

    1. sabrinaanthony.media

      A budget is the best form of communication for staying focus. It is an excellent tool for when you have trouble having a talk with yourself or your family about spending. Thanks for sharing.

  12. I love your app suggestions, and am looking forward to giving some a try. I use notes in my phone for our family budget. Very scientific lol

    1. sabrinaanthony.media

      Most of them are free so try each one until you find the one that works best for you. Glad I could help.

  13. Budgeting is so important if you want to control your finances and I don’t understand why more people don’t do them. Without one you are blind to your debts and will always find it difficult to get on top of them. With a budget acting like a map you can at least keep yourself on track to sort your finances.

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