Budgeting sounds like a dirty word to many people. It may make you feel restricted and like you don’t get a say in your spending. Or maybe it conjures up feelings of fear, anxiety, and failure. Whatever it is that’s holding you back from creating a budget, it’s time to let it go. Creating and using a budget effectively is the basis for the financial freedom you dream of. Budgeting can help you manage your money wisely in order to better plan and prepare for the necessities so that you can fully relax and enjoy your priorities.
Budgeting puts you in control
Creating a budget is essentially your way of telling your money what it needs to do ahead of time. Instead of allowing someone or something else to dictate how you spend your hard-earned cash, you decide upfront before any of it actually leaves your account. Instead of being convinced in the moment when your guard is down that this product or that service will somehow make your life better or that you simply can’t continue to live without it, having a budget puts you in control (rather than some FB ad or a slimy salesperson or your frienemy’s Instagram feed making you jealous…).
Deciding ahead of time what your priorities are let’s you have more power over your choices and allows you to be intentional about working towards your long term goals. And the best part? Your budget is totally flexible! If you decide halfway through the month that you really would rather spend that $50 on a new outfit instead of saving it for a vacation in 6 months, then you’re free to do so! Having a budget just lets you make that decision purposefully, understanding fully what you’re giving up in order to make it happen.
Budgeting allows you to plan ahead
When you set up your budget, you can plan ahead one week, one month, or even a year or more! There’s no limit to your budgeting capabilities. Knowing exactly what you have coming up and being able to plan ahead for it means that, when the time comes, you will be fully prepared for those irregular expenses and won’t be scrambling to figure out how to pay for them.
For example, most people have to pay to renew their license plate sticker once a year. This is an expected expense that comes at the same time every year and is usually the same cost. There are no surprises here. Yet so many of us don’t do anything about it until the notice comes and then we’re frantically trying to figure out how to pay for this “unexpected” bill. But there’s a better way. My renewal comes every March, so, starting in April (after the bill has been paid for the year), I start budgeting just a few dollars a month for next year’s bill. And when next March comes around, I just pay for the renewal. No stress, no rearranging the finances, no putting it on the credit card (and not being able to pay it), no sacrificing in other areas. The bill is paid and that’s it. Easy!
Some expenses that you might only pay once or twice a year (or perhaps every few months) include:
- License plate stickers
- Car insurance
- Life insurance
- Trash pick up
Budgeting allows you to be prepared for the unexpected
Ok, so we’ve covered all the things we know will come up. But there will always be things you aren’t planning for. Perhaps an emergency room visit, an illness that causes you to miss work, your car breaking down, a death in the family, or any number of other expenses that can pop up unexpectedly. The thing is, these expenses aren’t really unexpected either. We know they are going to happen – we just don’t know when.
So the goal here is to always have a little cushion that you can fall back on when they do happen. It’s usually recommended to have at least $1,000 in an emergency fund to start with. However, this amount may vary depending on your needs. A single person with nothing but a car payment might do well with only $500 to start. While a family of 4 with a mortgage and two cars may want to consider putting aside a bit more. You’ll need to evaluate your specific needs and make a plan based on that. But the main thing is to just have something set aside for when these things come up.
I will suggest that you keep this emergency fund in a separate account that is not as easily accessible. You don’t want this money to be tempting you to spend it. That completely defeats the purpose. But you also want it to be available when there is an emergency. You might consider keeping a separate checking account or even a money market (if you have a larger balance) so that you can access the funds if needed, but otherwise leave that checkbook put up out of sight and out of mind.
Budgeting allows you to enjoy life more fully
Now we get to the fun part! Having a budget never restricts you from enjoying your life. On the contrary, it really allows you to paint a full and true picture of your finances so that you can enjoy your life without fear.
Since you’ve now got all of your monthly and non-monthly expenses covered, it’s time to have some fun! Anything that’s left after fully funding the essentials is yours to do with whatever you want. If you enjoy getting a fancy coffee every morning, then budget for it. If you like snuggling up with a good book, add a category for book purchases. If you love buying new toys for your kids, make that a priority in your budget too. There really is no set rules on how you spend your money. That’s the beauty of your budget! It’s 100% yours and no one gets to tell you what should be most important or valuable to you.
Now, I know there are many of you thinking – well, there is nothing left after my essentials are covered. Some of you might even be in the situation where there’s not even enough to cover the essentials, let alone having anything left for the fun stuff. But please don’t lose hope. I know finances are often scary, stressful, and maybe even outright depressing. But you can dig yourself out of the hole and find a better life. It all starts with the budget. You must get an accurate picture of where you’re starting before you can figure out what steps to take to move forward. And as scary as it is, you’ve already taken your first huge step forward by even reading this article.
There are ways to cut spending or bring in more income if you’re struggling. And, even though that may not be ideal for many of us, remember that this is a temporary set-back on your journey to financial independence. Don’t let your fear or frustration derail you from your goals and living the life you dream of.
Budgeting frees you from the stress of never having enough
As I just mentioned, budgeting can be a huge scary thing. And that’s why so many people never do it. You think it won’t make any difference or there’s just not enough or my income isn’t consistent. But all these reasons and more are exactly why you need a budget! Until you can fully understand your starting point, you won’t be able to map out a clear path forward. And that means you continue to stay stuck in this endless cycle of stress, spend, come up short, repeat. That’s not how any of us wants to live.
So give yourself a pat on the back for even considering the idea of using a budget. And then take a deep breath, sit down, and get an honest view of your situation down on paper. As much as it might hurt at first, I promise that it will lead to the freedom you desire if you commit to sticking with it. Just take it one step at a time and don’t let small setbacks or slip-ups derail you. It’s time to have the life you deserve!
Budgeting is not the restrictive, “you-can’t-afford-to-enjoy-life” gimmick that many people imagine. On the contrary, using a budget effectively is one of the most freeing and satisfying ways to bring about peace and contentment in your life. Start living the life you dream of by getting your finances in order with a budget today.
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