Budgeting is not the sexiest thing we could talk about but it is one of the smartest. If you aren’t already budgeting your money its time you took a good look at your finances and make it a monthly, if not daily practice. Budgeting will help you reach proximate and long term life goals. Whether you are paying off debt, saving for your first home, treating yourself to a fun shopping spree, or just trying to cover your expenses each month, budgeting is the way to make it happen. Removing all the excuses and perpetual poppycock standing in the way of making this one task a habit is the key to reaching those goals. Do not wait another minute. Here are my top 5 reasons why I budget.
1. Paying off debt
I learn lessons the hard way and often more than once per lifetime. This brings me to my first reason why I budget. I am paying off debt, with purpose and plan for the second time. I have many posts about debt so if you are struggling, you are not alone. I’ve been there and its no fun. Budgeting is the key to helping me stay on track to pay off our hefty debt (80k in bad debt not counting our mortgage and cars, eek!) while continuing to pay for our routine life expenses.
To help you jump through all the perpetual poppycock that will try and stop you from starting your budget allow me to list some of the excuses that came to mind for me before I finally broke the cycle and started budgeting.
- I know where my money is going so I don’t need to budget.
- Budgeting will tell me I can’t spend my money the way I want.
- Its my money, I’ll do what I want with it.
- Budgeting isn’t going to help me because I don’t make enough to budget.
- The debt is too far out of hand, I’ll just ignore it and eventually I’ll stop living beyond my means and the debt will go away.
- Budgeting seems hard.
- I don’t know how to use spreadsheets.
- I don’t have the time to balance my budget.
- No one I know budgets.
Do you hear yourself in any of those excuses? I know its hard to break free from thought tracks like that but it can be done! Stopping the perpetual poppycock that stands between me and my best life is the reason I started this blog. I am fighting the excuse that stand in the way of living the life I want and documenting it for others entertainment! Good fun!
Back to the first and most important reason for me to budget, debt. Without having a budget, paying off our debt would not be possible. I’d continue to spend money without really knowing how much was going towards actual need verses senseless want. I want to be clear when I say senseless want. Budgeting does not mean that I am not allowed to buy items that would traditionally be listed as a “want”. Budgeting means, I acknowledge that I’d like to spend some of our money on “want” items or experiences, and properly allocating the money to those things in the budget. The senseless “want” I’m referring to is the thoughtless purchasing that happens unconsciously. We will go into that another time but note, there is a difference.
If you are living in debt, a budget is necessary to helping you overcome it and really start living. Don’t wait. Let’s start your budget now!
As noted earlier in this post, I am not great with money. In fact, I’ve been in bad debt twice in my 42 years and its taken a lot of hard work to get out of it. I’m terrible with money. Luckily, there are ways for people like me to learn to live with money and stop being as terrible with it.
Budgeting creates built in accountability. Once you make a budget, you must answer to it whenever money is spent. If you buy groceries, the budget must be notified. If you go out on a date, the budget needs be told about it. If you replace the dishwasher because it unexpectedly stopped working, the budget will definitely need to be informed.
The only way a budget will work is if you tend to it. Mid-month I start working out the details of my next months budget. For example, in mid December I’ll be working on January’s budget. This gives me time to plan for the known expenses early on to see how much wiggle money I will have to put towards entertainment, activities, birthdays, long distance planning like summer vacations, and of course putting a little bit aside to make sure I have at least 1k cash in the bank for those emergency situations like the dishwasher I mentioned in the previous paragraph.
Accountability from budgeting will help you cross off the finish line and achieve the goals you have set. Don’t let it feel like a chore. Think of accountability as your personal cheering section in the budgeting game. Each time you update your budget, its screaming your praises for staying on track. This is a helpful tool and will ultimately give you the positive reinforcement you might need to keep going.
3. Knowing where my money is going
There is something very satisfying about knowing where our money is going. Once I started budgeting 5 years ago and started consciously spending, I really gained an understanding of my spending habits and liked knowing what our money represented. Maybe this is what adulting feels like, and despite popular opinion, it doesn’t suck.
When I was spending unconsciously, we had a lot of stuff. We had rooms full of toys, gadgets, technology, clutter, etc. But if you asked me to tell you what I bought to end up in tens of thousands of dollars of debt, I probably would have starred at you blankly. The reality of spending willy-nilly is that none of our “stuff” resulted in a feeling of pride or satisfaction beyond the initial high of buying something. It was just a pile of homogenous things that we had.
A great example of how meaningless everything was, is I actually did one of those things that parents always threaten to do when their kids leave toys lying about. I would walk around the house, pick up toys and toss them straight in the trash if they were left out. AND THEY NEVER EVEN NOTICED! That’s because they had more than they needed and as a result nothing was valued. Things have changed a lot since then and I’m not sad about it one bit. We still want everything we see, but we don’t buy it unless we have the money and have deemed it worthy of the exchange.
Budgeting has made us put value on things we buy beyond just the price on the sales receipt. Every purchase represents the cost of that item AND the compromise we made to allocate money for that purchase in our budget. There is always a trade up. I don’t consider it a trade off because the feeling of making conscious decisions is so good, it definitely doesn’t feel “off”. Deciding to buy a new bike means we might not get to eat out at our favorite restaurant that month, but we make that decision and doing so brings added value to the choice we make. This is such a nice bonus, do not think lightly of it.
4. Creating good money habits
The more good habits I can create around money, the better my future will be and the more my kids will have to mimic in their own lives. As mentioned before, I am not naturally good with money. It takes work and commitment. I have made budgeting a habit and years later, I’m still doing it.
Budgeting has pointed out some “bad” money habits I’ve worked on changing. I use the word “bad” only to illustrate the contrast to the word “good”. They are not evil and sometimes we do budget for those “bad” habits because we want to. My good and bad list might be completely different from yours. That’s the beauty of budgets. They are unique to the spender. This is not meant to offend or make you reflect negatively on your own budget. It’s just to highlight things that I’ve put thought into and wanted to change.
I have already told you the benefit of added value to items we actually do buy that results from our budget choices. That is the first change I wanted to make when we started budgeting. The goal was to pay off debt but the changes we needed to make to have money to pay off debt meant we had to start planning to buy “things” and not just buying everything we wanted.
The result of this budget habit has made everyone in our house very aware of their belongings. I’d like to say that means the kids treat everything they own with respect and care but that would be a lie. The yard is scattered with nerf bullets most days and barbie still leaves her cloths scattered in rooms they don’t belong. The difference is, when I threaten to toss them if they aren’t put up, the kids know I mean business and replacing those items once they’ve been thrown out will require more work on their part. They are learning that money doesn’t grown on trees.
Another habit I wanted to change was eating out for every meal. That can really add up to a lot of money for a house of 4! I LOVE eating out and am not the best cook despite my cooking videos and Pampered Chef status. The truth is I have to follow recipes and watch lots of cooking videos to be able to make a delicious meal, but its totally doable if you want it to happen!
I knew that breaking the habit of spending so much money on eating out was important to help achieve the goal of paying off our debt. Over the years I’ve learned how to plan for eating out enough to feed our bellies and our entertainment appetites. The good news is that this habit actually isn’t hard to make because its fun to plan! I look forward to padding the restaurant budget to include things like birthday dinners and date nights. Its satisfying for my socially hungry soul and my ravenous belly.
The last money habit I’ll highlight in this section, that budgeting has taught me, is saving for the unknown. I still don’t have a lot of money saved but I do have enough squirreled away if something breaks unexpectedly or one of us is sick and needs medical care. This one new habit has brought me so much peace. Being able to pay for life’s curve balls and plot twists reduces stress that would otherwise wreak havoc on our household. Make it a habit to budget and a habit to save!
5. Technology makes it easy!
This is really the best reason to start budgeting. Technology and smart people around the globe have come up with some really awesome tools to make budgeting a no brainer. They’ve removed the hard work and paved the way for your budgeting success. Search the web for budgeting tools and you will see all the pages of suggestions. You can also search for FREE budgeting tools if you want to save some money. I’ve used both kinds and both have their pros and cons.
When I first started budgeting I used paper and pencil. I would write in a notebook what I was planning to bring in as income and what I was planning to pay out as expenses. I always used pencil because, as you go through a month there are often changes to your budget as the days unfold. Remember, a budget is not a one and done concept, especially if you do a zero budget like me.
A zero budget is just a type of budget that accounts for every cent of income so you always know where each penny is going. When you make a zero budget and still have money left to spend after you’ve planned for everything, you can’t leave that money unnamed. You can put it in savings or a Christmas fund but you can’t leave a balance. The purpose is to teach you to always know where your money is and how much you spend.
Once I moved further into my comfort zone with my budget habit I tested a few different spreadsheet options and was thrilled with how easy it was. Here is an example of a free option I found on the web. https://www.simple.com/blog/zero-based-budget-template
After my first year of budgeting I finally found what I’ve been using and continue to love to mange our household budget. I use the Dave Ramsey web app, Every Dollar. There are two options with this online tool, a free and a paid version. I started with the free version which is the same as the paid with the exception of linking bank accounts.
When I first started using EveryDollar, I did not feel it was a smart use of my money to pay for the tool because I was very far in debt and really needed to focus on putting every extra cent towards paying it off. I didn’t mind manually entering my transactions in the free version once or twice a week. It only took a few minutes of my time and kept my budget on track.
Once I felt like it made sense to make the investment and start using the paid version of EveryDollar I upgraded and was able to link my bank accounts. Just like accounting software, this automatically added my transactions into the budget and all I had to do was put them in a category to be deducted. It was a time saver and really stepped up my budget process.
I don’t regret using the free version for a while but if I had it to do over again I would have started with the paid and it would have been money well spent.
There are other options I’ve heard of over the years that do something similar but I have not tried them. Mint.com and Quickbooks are two that come to mind.
The point is technology takes the hard would out of the equation. Don’t let lack of experience hold you back from starting your budget. Find a tool that will make it as easy as it can be and start today!
After the last several years of budgeting, I’ve been able to pay down all but 30k of our debt and we are on track to pay that off completely in 2021. I am 100% positive that budgeting is what has gotten us to this point and we’ve grown so much from this experience. It’s my goal to not only pay off debt for the last time but to start an actual savings account that will make retirement a possibility one day. I know we can do it with the help of a budget!
Start yours now and let me know how it’s going. I’m no expert but I will cheer your efforts on!