Budgeting. The word makes people cringe. They don’t want to think about it, talk about it, much less learn about it… even if it’s one of the best things to improve your finances!
The other week I gave it some serious thought, and I think I finally figured out why people HATE budgeting. Ready for it?
They find it too restrictive.
No one likes being put in a sandbox, confined to some sort of rules. And that’s especially true when it comes to your own money (even if we build the sandbox in the first place).
Instead, we want freedom. Freedom to be spontaneous. To make decisions on the fly. To live in the moment.
I have to be honest though – if you see budgeting as restrictive, I think you’ve missed the point. You see, budgeting isn’t intended to be a set of hard rules. It’s supposed to be a personal map that leads to more freedom not less.
Confused? Let me show you why budgets actually give you more freedom…
Budgeting gives you freedom to spend guilt-free
First off, having a budget arms you with a license to spend freely. That’s right – you read it correctly. A finance-guy is telling you can freely spend your money.
You can spend your money however you want, on whatever you want, as long as you stay within budget.
Say those latest concert tickets came out, and you feel just have to go. You’re tempted to, but just don’t know if you should spend the money. As long as you’re not over budget, go for it. You see that new pair of headphones for sale (half price!) that you’ve wanted for a while? Go for it – as long as you’re within your budget.
We’ve all bought something at one time or another where we knew we couldn’t afford it. Buyer’s remorse comes and robs you of all your new enjoyment. Having a budget though helps you avoid this altogether. Rather than contemplating if you can afford it or not, a budget helps provide a sense of direction and freedom on how you can spend your money.
Get our FREE Simple Wealth Playbook eBook and our weekly updates!
Learn how to save more money through this FREE eBook and by subscribing to our weekly posts.
How are you able to improve your current financial situation if you don’t have a starting point? Or a goal? One of the worst things you can do is start shooting in the dark. You’re not setting yourself up for success.
A budget not only sets a goal, but it removes the anxiety of not knowing where you stand financially. You don’t have to pay with your credit card, praying that it won’t get declined. There’s no guessing. There’s no acting blind to it. And that’s a good thing. It means less anxiety for you and a clear understanding of your current financial picture.
Budgeting gives you financial freedom
Everyone dreams of one day being financially independent. No consumer debt. A paid-for car in the driveway. No mortgage payments. And heck, even a little nest egg for retirement. But getting there doesn’t happen by coincidence. It takes thoughtful planning and a little hard work to make it happen.
Setting a budget is one of the best ways to make this come to life. By establishing regular goals, and tracking progress, you can be confident you’re moving financially forward, not backward.
SWP Action Steps
We all can be better budgeters… myself included. There are always ways we can work to save more money.
Take a look at a couple of things below to help improve your own budgeting skills…
Beginners – Maybe this is the first time you’re considering using a budget. If so, good for you! It’s one of the best things you can do to reach financial independence. One of the biggest tips I can give you is to look at budgeting as a mindset, not a process. Sure, it’s essential to get into the nitty-gritty and track your spending, but it’s even more important to approach life in a “non-excessive” manner. That starts with how you spend your money, and the choices and trade-offs you make.
If you don’t currently have a budget, a quick google search can give you a couple of ideas on how to build one. There’s a ton of great ways to do it (too many to cover here) from the envelope/cash method, to a detailed Excel sheet. I’d recommend trying a few to see what works best for you.
In a future post, I’ll share with you my favorite way to budget. I’d also encourage you to check out some of my related posts below that can help you learn even more about building a budget, and how to save more money.
Intermediate / Advanced – If you fall into this category, chances are you’ve been budgeting for quite some time (hopefully to some success). My challenge for you would be to dig deeper. Turn over every line item in your budget to see where you can squeeze another $20, $50 or even $100. It’s funny how we take for granted the $50 gym membership, or even the $10 premium Spotify membership. Do we really need all the bells and whistles? And this time, don’t just let those extra savings sit in your savings account. The key here is to start you on a path of achieving “financial freedom.”
Make your money work for you. Use those savings to invest. You’d be surprised how small, regular savings can add up – consistency is what’s important. Create a long-term goal, and stick with it. And lastly, celebrate some of the big milestones! There’s no sense in saving a lot of money at the cost of living a boring life. Enjoy the journey – after all, you’ve worked hard for it!
Related post: Learn how to pay yourself first and save more money
Think it through
- How has your perspective on budgeting changed? Is there anything you’d do differently?
- If you’re new to budgeting, how can you ensure you’ll stick with it?
- If you’re an experienced budget-er, what are the biggest de-railers to sticking with your budget? Why?
- Learn how to pay yourself first and save more money
- The one thing most people forget most when budgeting
- How not to overspend and save money
PS – If you’ve found this article helpful, please share this using the social buttons below! You can also sign-up to receive all my updates weekly in your inbox.
Don't miss out! Join the newsletter
Subscribe to get our latest content by email.