I hate to budget, follow a budget, track expenses for a budget, and nearly everything else that goes on with a budget.
But a proper budget can be instrumental in helping you deal with money troubles.
Budgeting With Two Options
When most people think about budgeting they think about making their life fit within some preset categories and spending limits. That’s just painful and not the way life works. A wishlist on how you want to spend your money is a recipe for disaster for most.
The best budget is not based on a wishlist of spending but a record of spending. Before you get down to real budgeting you need to first understand how you spend your money. Armed with that knowledge you can then develop a spending plan to best fit your life.
Think about it like this, the spending plan budget approach allows you to gather data, make conscious decisions about changes you are willing to make, and embrace the change.
Traditional budgeting is just a financial whipping if you are not one of those chronic attention to detail people.
Which Budgeting Approach Will Work Best for You?
The best budgeting approach is going to be one that fits your money personality the best. If you take the test and discover you are someone who is very attentive to detail and enjoys recording information then constant recording and updating of your budget is going to be a good fit for you.
However if you are someone who is typically artistic and is not attentive to detail then tracking your spending for a couple of months and making decisions about how you change your spending habits is going the be the better approach.
If you are hoping budgeting will be the secret to getting out of debt, it is doubtful budgeting alone will do the trick. To better understand why, read this.
The effectiveness of budgeting is tentative. A budget is but one part of dealing with your debt. It also takes looking at increasing your income as well. Ultimately getting out of debt is going to be a combination of increasing income and reducing expenses. And you probably don’t need some fancy pain in the butt budgeting process to figure out what expenses you can cut. I bet you already know or have a strong idea.
Budgeting Should Not Be USed to Cut All Your Fun
A huge mistake I see people make when they develop their wishlist budget is to cut all the fun out of their lives. They think every expense which creates some joy is not necessary. I think the opposite is true. I’ve watched so many people make that wishlist budget that sets hopeful spending targets and eliminates all fun, fail.
Budgeting should not be about cutting all fun. No a budget should seek to achieve some balance in your life. If you went out four times a week before you wanted to cut back, what about just trimming it to one or two times a week? Start in manageable reductions. If you just slice everything that’s fun out of your life you are not going to stick to your bare bones budget.
Budgeting is a tool, not a magic wand.