The Myths of Budgeting

For some reason making and more importantly following a budget seems to be the bane of most people's existence.  Sadly, now it is considered restrictive, outdated and unnecessary.  I want to help you with these myths because living by one is an essential part of building wealth and succeeding with your money.  The simple fact is that if you can't live on a realistic budget then you will always feel broke and wonder where your money went.  This means that you have to learn to live on less than you earn.  I know we all know this but the way our culture has developed over the last 80 or 90 years makes it especially difficult to live by.  Our generation isn't taught to work, earn and save to buy things like our parents and grandparents did.  Instead we are taught to buy whatever we want when we want using credit, because we 'deserve it' and we 'work hard'.  I think our grand parents worked a lot harder than we do today and they certainly didn't come home from work at night just to park themselves in front of the mind numbing television.  I mean come on people! We are privileged to live in the greatest country in the history of the world and we spend our time complaining about the latest gadget we don't have and acting like children throwing tantrums because we want it NOW!


So lets talk about what a budget is and isn't.  What is a budget? It's simply you telling your money where to go instead of wondering where it went. (Yes- that is a Dave Ramseyism.)  It's an intentional plan of where you need and more importantly want to spend your money.  You're the one in charge of your money, but (like I quoted) if you don't learn to manage your money, the lack of it will always manage you.  If you think it's too restrictive, then change it if you want.  If you don't like your plan or follow it, guess whose fault that is?


I believe budgets fail for 3 specific reasons and avoiding them is half the battle.  First, it's not month specific.  Every month varies.  There is no such thing as a perfect month.  You have to make a new budget every month- not once a year.  This is especially true if you have an irregular income because of self-Employment, commissions or overtime.  (I will go into more detail about this in another post.)  Second, it's not realistic.  You have to account for the little things (clothes, personal care or quarterly & semi-annually bills).  These things tend to sneak up on us and wreak havoc on our budget.  Third, you're not following it.  Chances are that the first time you sit down and actually go over the numbers of what you have been spending you will be shocked at how much you've spent in restaurants, going out or on clothes.  Whatever your troubled category is, you have to face it head on to form a plan.


In summary, as you make your basic budget for the month keep a few things in mind.  Always take care of your four walls first.  This means food, clothing, rent/mtg, lights, heat/air, water, gas, phone and transportation.  If you are struggling, doing this will give you a sense of power and hope.  Give it time.  Just like trying to get into shape physically, toning up financially takes practice and time. Plan on making changes and mistakes the first few months.  Don't give up!  It's very easy to get derailed by little things that come up during the month.  This is why it's so important to have a budget in the first place.