Why You NEED a Budget and How to Create One that Works

For years I absolutely abhorred the word “budget”. For some reason, the term conjured up images in my mind of shackles, chains and prison cells. I viewed a budget as a way to restrain me from having fun, from getting what I deserved in life.ย 

Do I Really Need a Budget?

As such, I tried for years to live with a working budget without any success at all. I’d create one, wait for the paychecks to come in, blow my budget within the first week of the month and then give up, going back to simply spending as I saw fit with minimal idea of where our money was going.

It was only when my husband and I sat down and took a big-picture look at our finances and saw that we had a ridiculously high debt load that I began to see a budget as something we needed, regardless of whether or not we wanted to live by one.

Budgets Provide Freedom

We made our first family budget in January of 2013, and for the first time in our lives, we began to track our daily and monthly expenditures.

But this time, instead of hating living by a budget, I realized a very important key to the budget concept:

Budgets provide freedom, not chains.

Yep, you heard it here first, folks. Or maybe you didn’t. But that simple truth is as rock solid as it gets. Whereas before I viewed budgets as something that limited my freedom, after actually living on a budget and tracking expenses for a couple of months, I realized that budgets actually provide freedom in that they give you complete control over your money.

No more wondering where your paycheck goes each month. No more wondering whether or not you’ll have enough money with which to pay the bills. Creating a budget and spend-tracking plan puts you in complete control of where your money goes. It helps you to see on paper what you’ve got to work with each month.

Budgets and Dreams

From there, you can prioritize your spending as you see fit, to cover both needs and wants. For instance, if your dream is to dump your mortgage debt so that you can live a debt free life, you can prioritize your spending so that all extra funds go toward the mortgage debt.

If your dream is to travel Europe for a month, you can use your budget to allot a certain amount of money each month to a travel fund and pay cash for your dream. That certainly beats wasting your money on lattes’ at the local coffee shop and drive-thru runs for a super sized fries.

Whatever your financial dreams, whether they be to pay off debt, to retire early or to pay cash for a dream, a budget is the key to succeeding at reaching your goal.

Budgets and Me

This month marks the start of our fourth consecutive year of budgeting and spend-tracking. Ironically, I’ve fallen in love with our budget and our spend-tracking system. It brings me great joy to track where our earnings go, and to make adjustments as necessary that help us come closer to achieving our dream of debt freedom.

Budgets and You

If you’ve been living without the blessing of a budget and a spend-tracking sheet, I encourage you to give budgeting a try. Although budgets have a reputation of being dreadful and slavery-inducing, I think that ill-deserved reputation comes from those who’ve never given budgeting and spend-tracking a serious try.

Those who are already in complete control of their spending may do well without a budget, but for those, like us, who were baffled each and every month by why we had no savings and a boatload of consumer debt, a budget will change your life as if you’d won the lottery.

Commit today to taking your financial life by the horns, and implement a budget that will help you reach all of your financial dreams.


*Photo Courtesy of Chris Potter

11 comments on “Why You NEED a Budget and How to Create One that Works

  1. I have been thinking through what a budget actually is and isn’t. We don’t “budget” in the traditional monthly sense, but we do have an annual budget that reflects our goals and how we’re going to get our money toward those and not all going to expenses. I think it depends on the person. If you know where your money is going through tracking and you are meeting your goals, detailed monthly budgeting might not make a difference. But that is probably not the situation for most. Here’s my take on whether you need a budget: http://wp.me/p5hPEv-hg

  2. “Budgets provide freedom, not chains.” !!! #Truth! Love it!

    A bad budget is just that, bad. I agree that the key is making your budget and budget process work for you. We’re all very different. The idea that a single approach or tool would work for us all is crazy.

    Be mindful, budget and set yourself free!! Love it

  3. I think the word budget scares people because they thing it means no spending, but it’s often the opposite.It’s about being organized, planning, and intentional with your money and the things you value and prioritize the most. Without a budget it’s difficult to do these things.

  4. I think that one reason why people don’t like budgets is that they think that budgets don’t allow for spontaneity. But that’s not true. You can budget “blow money”. Of course a budget limits spontaneous purchases – but that’s a good thing! A measured, budgeted amount for the odd spontaneous purchases? Just fine.

  5. We’ve also historically been in the anti-budget camp, but I’m slowly coming around to the realization that our money plan is still a budget, even if it doesn’t have the same kind of line items that other budgets have. We have a heavily automated system where huge percentages of our income come right off the top of each paycheck, and then we constrain our spending to fit within the remainder. That, by definition, means we’re living on a particular budget, so that kinda counts, huh? ๐Ÿ˜‰

  6. I’ve been tracking our spending for about 18 months, and it’s very helpful (and sometimes a little frightening). I tried budgeting for a few months, butmy husband wanted no part of it, and I found it tedious and not very helpful. Instead, I’m keeping track of expenses versus income throughout the month. We’ve designated a large chunk of money for ALL monthly expenditures, without various categories, and all expenses are tracked out of that. I’m hoping this simplified system will work better for us.

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