Why Budgets = Freedom, Not Restriction
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It’s as if "budget" was a naughty word.
Or at least as appealing as the word “diet”.
Somehow this word got twisted out of proportion to mean you’re being restricted. That you can’t buy things you want.
Here's a common one around the office. “Ahh, I’d love to go out to lunch with friends today, but I’m on a budget.”
Here's another one someone actually told me, "My wife refuses to be on a budget, she thinks budgets are restrictive because you're not allowed to spend money " (umm, misinformed?)
Actually the reverse is what’s true. Budgets = freedom, and I’ll show you why.
A budget is nothing more than a PLAN for your money.
You have money coming in and money going out. It’s the circle of life (err, money).
Creating a budget is nothing more than knowing how much you have coming in, going out, and where it’s going. When you create a budget, you create a plan for your money.
I've included things like entertainment, clothing, and the occasional eating out in my budget. I can spend my money in those areas guilt free because I planned for it. AND my spending doesn't get out of control either. Spending in those areas does not overlap with mortgage, utilities and groceries.
YOU are in control of your money
(So long as you have a plan. If you don't, you're NOT in control.)
Yes, YOU get to decide where your money goes.
Set aside the first amount of money to cover living expenses. Decide how much you want to save for investing in retirements and rainy days. If you want to eat out once a week, go for it. Just make sure it’s planned for and you have the ability to cover it without getting the lights turned off.
Your kids are going to outgrow their clothes. No one is telling you that you can’t get them new clothes. Just plan for it. When they do need clothes it's no big deal. You'll have the money to go buy whatever you need.
Budgets can be flexible
If handled in a responsible manner, money can be shifted and moved around as needed.
Did a wedding invitation sneak in the mail and now you need to get a gift that you didn't plan for? Don't sweat it, decide on a nice and affordable gift and snitch a little money from a savings fund.
If you have a budget, you likely have a savings fund available for miscellaneous items.
If you don't you might find yourself in a scramble to come up with the money for the gift.
Budgets to the rescue yet again!
NOT having a budget is the problem ...
Ever scratched your head and uttered the words “Where’d all my money go?”
Or looked at your bank statement and asked your spouse, “What did we buy at Target last month for $100?” and then not remember?
This is especially a problem when the paycheck is gone and you still have a couple of unopened bills. Ever been guilty of that?
By budgeting and monitoring your money, you know where your money went. And you know how much you have to work with to cover all of your expenses.
You don’t want to end up embarrassed because you spent all your money, you don’t have enough to pay the electric bill and you have no idea where all your money went.
If you haven’t been keeping track of your money, go back through your bank statements and credit card statements and see where your money has been going. You might be in for a complete shock how much you spend and where.
When I was first married we didn’t have a set budget. (Guilty as charged!) I felt like we were eating out too much so we sat down and added up all of our restaurant transactions. It was in the hundreds of dollars. Over $500/month if I remember right!
We about had a heart attack how much we spent eating out and decided then and there we needed to manage our money a whole lot better.
The freedom I get from my budget:
- I know I have money for things I need.
- I know I can plan my money for things I want.
- I know that an emergency won't affect my ability to pay my mortgage.
- I know I'll have enough money when Christmas comes around without picking up extra shifts or charging a credit card.
- If I want something expensive I put it in the plan and save up for it. No big deal.
- I know when to say "no" to myself, and it doesn't hurt that bad because I have a plan.
In other words, planning and knowing my limits turns money into a non-issue.
Having a budget virtually eliminates stress about money.
And that, friends, is freedom.