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Money

3 Reasons to Start Budgeting

Budget. The forbidden word for most of the world. Almost every time someone asks me for financial advice, I open with suggesting a budget. Unfortunately, that is often the beginning of the end of our conversation.

Once upon a time, I thought budgeting was the end of fun in my life. People who budget don’t go out to eat. They don’t take vacations. And of course they don’t buy Starbucks.

I couldn’t have been more wrong.

Budgeting propelled our efforts to pay off all of our consumer debt. It has helped us to invest more for our future. Our budget has even allowed us to have more money to spend on having fun!

How is it that something SO helpful is looked at in such a negative light?

If you’re on the fence about budgeting, you’ve come to the right place.

Let’s take a closer look at the benefits a budget offers you.

Get in Tune With Your Spending

Before Gina and I started budgeting, we would spend aimlessly. I rarely knew our bank account balance. Better yet, I was frequently afraid to even look at it because I didn’t want to know how bad it was.

I had no idea how much we were spending or what we were spending money on.

Now that we plan our spending for the upcoming month, we know where every dollar is going. Of course we can’t plan for every single expenditure. However, we keep every receipt, add up each category of spending, and add them to the budget each week.

At the end of a month, we can see what we’ve spent on food, necessities, our pets, and every other category that you can think of. We are then able to utilize that information to predict our next month’s budget, becoming more accurate every month.

Here’s a question. If you don’t know where all your money is going, how would you change the way you spend? What if you decided you wanted to save and buy a new car. Where would you cut back?

By budgeting, you can easily make a few small adjustments and direct your money towards your new goals or desires.

Pay Yourself First

There’s nothing stopping you from saving or investing before you start spending if you don’t have a budget. However, without a budget, it can be stressful to invest and just hope that you have enough money left for the rest of the month.

By utilizing a budget, you can choose to save or invest, and distribute your remaining income for your expenditures.

So many people make a goal of investing “whatever is left” at the end of a month. Those people almost always reach their goal. The issue is, there’s usually nothing left!

Pay yourself first. Use a budget and learn how to live on slightly less than before. Invest first, and start building for your future. You’ll be amazed at how easy it is to live on less money once you’ve put a budget in place.

Spend Guiltlessly

Most people think of budgets like handcuffs for their life. They think that if you have a budget, you must be boring and never spend money on having fun.

This is, in my opinion, one of the biggest misunderstandings about personal finance that people have.

Gina and I set money aside each month that is only meant for spending on ourselves. We don’t have ANY say in how each other spends our own “spending money.”

Just like that, we have added fun to our budget. That money isn’t needed to cover our expenses and it’s not meant for investing.

By adding spending money to our budget, we no longer feel the least bit guilty stopping at Starbucks or going out to eat. We don’t, even for a second, have to sit through a movie feeling like we could have invested the money we spent on popcorn.

By using a budget, you set yourself free to spend guiltlessly.

Conclusion

Are you willing to give budgeting a try?

After just 90 days of keeping your receipts and adding them to your budget, you will likely have a great idea of what your spending habits look like.

You’ll quickly be able to adjust your spending habits in order to pay yourself first and leave plenty of money for enjoying life.

Imagine if you were able to start investing more for your future every single month and then live and spend without wondering if you’ll have enough to save a little at month’s end.

If you decide to give budgeting a shot, please reach out to me via the contact form or the Facebook page @FourWallsofFIRE with any questions. I will gladly provide you with my own budgeting Excel sheet along with instructions!

2 Comments

  • Reply
    Chris Lund
    April 13, 2019 at 4:31 am

    I found this quote to be 100% true for me: “If you pay yourself first, you’ll never miss it. If you pay yourself last, you’ll never do it.” Furthermore, if you actually do start paying yourself first (make saving a priority, budget, or whatever you want to call it), pretty soon two things happen… First, it becomes more fun watching the saving/investments grow than it was fun wasting the money on stupid stuff you never really cared about… Second, when a raise comes along, or a promotion, a bonus, or some side income, you realize, I don’t really need that money to live on, so you can put all or most of it to savings/investing… Where, normally, you would have immediately found ways to waste it. Brian Tracy calls it Parkinson’s Law – expenses always rise to meet income (or even by a little bit exceed it). Start a budget! Pay yourself first!!! Rock on!!!

    • Reply
      Matthew
      April 13, 2019 at 11:28 am

      Awesome quotes! Gina and I invest first and then we invest last too. Wherever we underspent in the budget gets invested. But by investing first, we will never have a disappointing month because we always make some progress!

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