Budgeting is frequently given a negative reputation. Some individuals may believe that being on a budget indicates a lack of wealth or constraints on making desired purchases, which is untrue. Others might think a budget is unnecessary if you aren’t overspending. Whichever side you’re on, the choice to budget is a personal one.
DOES BUDGETING APPLY TO EVERYONE?
It’s common for friends to inquire how they can improve their financial stability, to which my initial response was, “Start a budget,” even though I, myself, don’t have one. Although I don’t follow a budget, I’d classify myself as financially secure and sensible with my assets. I’m debt-free, thrifty by nature, and financially capable of leaving my 9-to-5 job to freelance.
After contemplating this, I realized it was absurd that I was advising others to do what I didn’t practice. Is budgeting essential for everyone? The answer is subjective.
IDENTIFY WHAT STRATEGY SUITS YOU
When I decided to regulate my finances, I searched online for techniques on initiating a budget. I studied various budgeting concepts, took a few notes, then enthusiastically shared my new insights about budgeting with my husband. Sadly, he was far from thrilled with the idea of a budget, due to his free-spending upbringing.
TRACK YOUR EXPENDITURE
Undeterred, I proposed we abandon conventional budgeting practices and instead, track our monthly expenditures. This idea was well-received by my husband, who even purchased notepads for us to monitor our daily transactions. Through this process, he started acknowledging his excessive spending on trivial things like bar tabs, cigarettes, and games. This realization led to ditching those spending habits and paying more attention to our financial situation.
Believe it or not, it was not budgeting, but a candid reflection on our spending habits that brought about a significant financial impact on our lives. Keeping tabs on our expenses is crucial, irrespective of whether you follow a traditional budget plan or not.
MAKE SMALL ADJUSTMENTS
In the absence of a traditional budget, small adaptations like tracking our spending led to more substantial changes, aligning our expenses with our objectives.
This seemingly simple adjustment led us to pay off our mortgage, increase our retirement funds and save at least 50% of our monthly income.
SAFEGUARDING SAVINGS OUR WAY
Our method for budgeting involves transferring half of our income into a specific account for usual expenses, while the other half is moved into a savings or investment account.
Our approach may seem non-traditional, but it has served our needs – you may find it useful as well. You can start small with 90% of your income for expenses and 10% for savings, and gradually adjust as your financial situation improves.
SIMPLICITY IS KEY
Budgeting doesn’t necessarily have to be intimidating. Whether you opt for traditional budgeting or expense tracking, neither are complicated. Simply find the method that works best for you and your family.
BE TRUE TO YOURSELF
It’s crucial to be honest about your spending habits and identify if a budget is necessary for you. Budgeting isn’t an indicator of poor money management; in fact, it’s quite the opposite. The savviest individuals monitor their spending meticulously. Simultaneously, if you find budgeting too stringent but have a good handle on your finances, stick to tracking your spending, consider it a lighter version of budgeting. Regardless of which path you choose, it would be a positive step towards financial stability.
Important questions to ask yourself – Do you use a conventional budget or track your expenses? Do you find budgeting important?
