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The Truth About Budgeting

The Truth About Budgeting

know the truth about budgetingThe truth about budgeting is that it’s hard work. You think: “Why can’t I just have everything I want all the time?” Maybe you don’t even want luxury items or super expensive clothes and stuff like that, you simply want to go out to eat a bit more often and get a great Starbucks coffee every other day. The answer is simple: You can’t have everything you want when you want it because you need to pay off your student loans and maybe retire before you’re eighty. Budgeting means giving up things that you like in the present so that you can have what you want in the future. Whatever your reason for budgeting and saving your money, it is going to make the present a little less enjoyable for you, but your future will be much more exciting.

Another truth about budgeting is that it doesn’t work unless you make it work, which means if you don’t personalize your budget and have a plan you will not be a very successful budgeter – you can’t just print off a budget plan from the internet, you have to use the internet as a resource to create your own. To be a successful budgeter, you have to really know yourself or give yourself a trial period to see what works for you. The best place to begin is to record your spending for a period of time. You should probably start with at least a week and continue meticulously recording your spending for up to a month (any longer and you will just get bored). When your recording period is over, sit down with your notes and add up where your money is going. Look at what categories take up the most of your money; do you throw it away at Starbucks? Do you grocery shop too often? Do you make too many Target trips in a week? Find out where your money is actually going.

Once you know where your money actually goes every month or week or other period of time, you can effectively start limiting your spending in certain areas to free up money for saving or spending in another area. Looking at your spending data you will probably realize that you are overspending on something that you hadn’t really thought of. For example, you might see that you are spending upwards of one hundred dollars a month on your special eat-out Fridays. That is a perfect place to save money, because although you might think that you need to go out to eat at least once a week, there is a guaranteed chance that you will be just fine if you limit your consumption from once a week to once a month.

Overall, a budget is a commitment. Like anything you commit to, it has to fit your lifestyle and your needs. Once you have a dynamic budget that works for you, you start to worry less and enjoy life more – in the long run too, which is the important part of creating a budget.

{ 5 comments… add one }
  • KennyK September 24, 2012, 7:18 am

    For people it’s often hard to see the long term benefit, but reading this article would definitely help them. It’s important to see budgeting as a form of investment in your future. You can make a few changes now and you’ll see the benefits later on. It can be hard work, but there are a lot of things that you can do that don’t require too much work in order to have an effect.

    Even tracking your expenses for a one or two week period doesn’t take much time, and you can quickly see where your money is going after a few basic calculations. Then you can see if it makes sense or not, or if you can make changes.

    You have to know yourself and the goals you have for the future. If you keep your goals in mind, it will be easier to take the necessary steps. Sacrifices turn into ‘investments’ once you realize why you’re budgeting.

    Reply
  • jessamom September 30, 2012, 7:47 am

    I’ve always had a mindset to not spend money unless I already have it in the bank. My parents taught me at 18 with my first credit card to pay it off each month. Only spend what you have was engrained in my brain and I’m thankful for that!

    It does surprise me when I see people with $40,000 in student loans who go shopping every weekend, stop at starbucks every day, and choose to eat out more than cook at home. I know a huge loan hanging over their head can be extremely frightening and seem impossible to wipe out. I think people instead give up and figure they will always be in debt, so they might as well keep spending and enjoy life now since they’ll be working forever.

    In reality, cutting out the extras does not really diminish your quality of life. You just have to find different things to be interested in. Learn to make your own specialty coffee drink at home for the fraction of a cost. Have a party and do a clothing swap with some friends. Go outside and take a hike, start jogging, join a free hobbyist club. There are many ways to have fun and feel fulfilled without spending money.

    “Sacrifices turn into ‘investments’ once you realize why you’re budgeting.” My husband and I have not had cable for 5 years now. For some people, this would be unthinkable. Honestly, we don’t miss it! It was an easy choice, along with having a basic cell phone plan instead of the crazy expensive data plan. Decisions like this in our budget have allowed me to stay at home with our young children and invest my time and energy in them. If we truly believed we needed all those extras that most feel are necessities now, we’d either be in deep debt or I’d be watching someone else raise my children while I worked all day long.

    Reply
  • Orange Julibee October 1, 2012, 8:12 am

    While I’ve gotten better at impulse shopping, I still have a long way to go. My weakness is online shopping. It’s so easy to get wrapped up in the thrill of a purchase. One can easily forget that it’s not ‘play money’ you’re handling. Credit cards have to be paid off, and PayPal does subtract from your banking accounts.

    At one point, I maintained a ledger book that outlined every cent I spent. It was tough at times, but it really did help to know where my money went and where I could curb spending.

    Setting a goal for something you want to do–go on vacation, start a side business–can help you in achieving financial success. I like to achieve things and I see the goals as a game prize, almost like a blue ribbon for coming in first. That little bit of self-competition has helped me in the past. Hopefully, I can get back on track and stick with it this time.

    Reply
  • Lloyd October 18, 2012, 4:52 am

    The biggest thing I found is that when your funds are low you’ll learn to budget and save A LOT more. When I had cash flowing freely I’d buy whatever I wanted and sometimes waste money on pointless things (70-100$ a month on fast food versus buying bulk grocery food and making it for work). Now I research,think, and actually take a second to say do I really need that or just ‘want’ it!

    Reply
  • Herewegrow October 27, 2012, 8:51 pm

    Recently I was diagnosed as Bipolar type 1 and one of the symptoms of this disease is compulsive spending. I have been in need of a budget for a long time but my disease has made it even more imperative that I write a budget and adhere to it. This article was very helpful and made me feel like I have the ability to gain control of my money and plan for financially secure future.

    Reply

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