Telling people how to manage money can be difficult. What works for one person won’t work for someone else. The reason is simple. All financial moves are based on behavior. And people tend to bristle at being told how to behave. So, it is true that there is no best way to budget.
But it’s also true you should have a budget, and creating one is the financial gift you can ever give yourself. Here’s why.
Without a budget, you lose your freedom
That sounds ironic because most people view budgeting as a chore and something that tells you what you can’t do. But let’s face it: Either you run your money or it runs you. So knowing when and where your money goes gives you the freedom to make better decisions.
When you don’t have a budget, you lose much more than money. You lose time because most people that don’t budget can find themselves deep in debt. And those creditors are waiting for you at the beginning of every pay period. So, you have to constantly grind away to pay the bills. That often equates to more time at work to make more money.
Even peace of mind escapes you. You lose the freedom to think big because debt is all you have on your mind.
Without a budget, you lose control
“Ignore your teeth. They’ll go away.” Unfortunately, that famous dentistry marketing quote could easily apply to money. If you don’t have control over your money, it will leave you regardless of how much you make. A quick Google search will reveal a laundry list of wealthy people who lost everything. Why? Because without a budget, you have no idea where your money is going.
A budget lets you do what’s most important in your life
One famous budget expert loves to tell the story of a client he was helping. The client made great money but never had enough to contribute to charity. What their work revealed was that the client was spending a considerable portion of his income eating out. So he tightened up that portion of his spending and gave hundreds of dollars each month to the groups he valued. Oh, and he lost a bunch of weight, as well!
Budgeting gives you the information needed to spend your money on things that bring meaning to your life.
A budget reduces stress
We’ve all heard the story of the person in the checkout line sweating bullets and hoping there’s enough money to cover their purchase. Maybe you’ve even been there yourself. Either way, everyday purchases shouldn’t be a source of stress. Keeping a budget eliminates that problem. You know how and when your money gets spent. So, you make every purchase with confidence. And that’s a great feeling!
Hopefully, these ideas have helped you see that budgeting is not a burden. It can be the exact opposite. It can free up your time, improve your mental and physical health, and even find more meaning in your life.