I was reading a really stellar post over at Consumerism Commentary a few days ago about 10 Easy ways to Save Money Without Much Effort and was nodding my head along with all Flexo’s points until I came to this section:
A budget is probably the most depressing part of personal finance—and that’s why I avoid it. If my income dips so low that it approaches my ever-increasing expenses, I’m going to have to reconsider my approach. I see budgets as guidelines, and I believe they shouldn’t be inflexible. Sometimes, to enjoy life while we can, we have to make sacrifices in one category to pay for another. Budgeting discourages that; budgeting discourages living.
It resonated with me because not too long ago, I felt that way too. I used to look at the idea of a budget as a way to stop myself from having any fun and living life. And although a budget can be used that way, it doesn’t have to be, and in fact, I would argue that when used properly, a budget is a tool designed to enhance your enjoyment of life and help you live your life to the fullest, not limit it.
I used to have what I called a budget, but really it was more of a spending plan. I had a list of my bills, and I allocated money to them. Otherwise, everything else just came from whatever was left over. It seemed to work, but I eventually realized that a lot more money was slipping through my fingers than really needed to, and that if I knew better where all my money was going, I could do more with it. I started talking to my friend that I knew had a budget, and researching different methods of budgeting available online, and my budget was born.
A budget gives you an accurate picture of reality, and with reality you can make informed choices. Without a budget, I have to guess and estimate how much money I have for any particular expense. That can lead to both making a costly mistake and spending more money than I have available, or choosing to forsake something I could actually afford simply because I’m not really sure if I can afford it or not. And with a budget I can make choices between different things, knowing exactly what I am giving up for whatever else I choose to have. That doesn’t stop me from living, it lets me live comfortably and with foresight.
Assigning every dollar a job makes your money work for you as hard as you work for your money, and that is what budgeting is. Why do I say that? Because knowing what dollars are allocated to what before you even get them helps to maximize the effectiveness of how they are used. Budgeting is, in its purest form, the assignment of your income to your expenses and savings. Flexibility is also a key to successful budgeting. If one category is more expensive than you planned, you can make choices about what other categories to cut back on to make everything work. Informed choices. When you budget, spending and saving and investing money is all about choices of what you value more, and what you want to have now and in the future.
Which leads me to my own budget. My personal budget right now is unnaturally strict because I choose it to be. And *choose* is the operative word there. I’ve made some mistakes in the past and I have a large amount of debt to take care of. I am sure my budget seems the epitome of what horrid things budgets do to people – it has no room for entertainment, dining out, and a number of other things. But the key to this is, that is my choice. I choose to conserve any money I can for swift debt reduction so that I will in the future have more funds to devote to living life to the fullest. That’s my choice. And when the debt is gone – I will still budget. I will budget differently, in that my money will be allocated in a different manner, but I will still budget. Budgeting provides the ability to understand where all of your money is going and make smart decisions with that money – if I’d done this years ago I wouldn’t be in the same position I am now. But I *choose* to devote my funds to debt reduction – and that is the key. I could choose to spend more of our money on entertainment right now. It would just be choosing to get out of debt less quickly.
You might have guessed I am a huge fan of budgeting. Budgeting is what has helped me the most, bar none, in getting out of debt. I’m not there yet but I am a whole lot further than I was 6 months ago. And flexible budgeting is what has allowed me to do this and be happy about it too. Sure I grumble and groan at times about the budget – but it isn’t the fault of the budget, it is the fault of poor choices I made in the past that I am still having to budget for now. As I said, if I budgeted back then, I might not be in this position now.
Can all this be done without a budget? Sure. Lots of people are very successful with their own personal finances without a budget in sight. But I’d argue that for the vast majority of people, if they tried budgeting, it’d show some sort of improvement or at least greater awareness in what they value and the choices they make with their money every day. That’s my take at least. Then again, I’m a huge fan of the budget. Budgets don’t discourage living, budgets enhance living.