Budget, such a dirty word

“Who wants to budget anyway?”

“Urgh, it’s so boring, and frankly, I don’t want to live my life that way, counting every penny.”

“Budgets don’t work. So what if I know how much I spend on everything. It’s not going to change my financial situation.”

These are the typical answers I hear when I ask people whether they do budgets on the regular basis. I can totally relate since by nature, I’m not one who gravitates toward routines, and budgeting sounds like a boring routine to me. I confess that every one of those thoughts came through my mind before, and when I looked deep inside myself, I realized that the concept of budgeting evokes emotions of deprivation and inprisonment for me. (What emotions does the word “budget” bring to you?)
It’s taken me years to overcome my aversion to budgeting. I want to share what finally got me to make that mental shift, which I think is the most crucial first step, because once you’ve made the mental shift, you stop fighting.

When I was working in real estate as a mortgage banker, I had a business coach for almost 5 years through Buffini & Company. I had learned many valuable things, and one of them was on budgeting. Brian Buffini said: ” Budget doesn’t restrain you. Budget gives you freedom.” That counter-intuitive statement caught my attention, and as someone who likes challenges, I wanted to see for myself how that would be true for me. So, I followed the steps outlined for us, tracking every $ I spent. I even carried around a paper-based booklet to write down all the expenses at the point of sale. He called it “the moment of choice”. When I took out my wallet to pay and having to write it in my booklet, I had to ask myself the question: “do I really need this? Or do I want it?” So, how does this give me more freedom?

Let’s look at why budgeting is important.

if you want to improve your financial situation, how do you improve if you don’t know where you are starting?
Budgeting is a necessary tool for creating buffer for the rainy day. Let’s say if you want to have enough savings to last you for a year (in case you lose your job/income), how do you calculate a reliable number if you don’t know your true spending? Most people who don’t budget under-estimate their spending. So, you may find yourself in a situation where you think you have enough to last a year, but maybe in reality, you’ve only got 6 months.
Without a budget, people tend to spend on impulse or self-justification for why the expenses are necessary. This constant act of story making and self justification creates internal stress without us even noticing it. However, if you conscientiously design a spending allocation that is in alignment with your true values, and stick with it, you will all of a sudden feel the freedom that comes from the knowledge that you can spend without having to make up stories or feeling guilty. This is very powerful and liberating!

I can go on with more reasons, but for now, I would also like to offer some tips to overcome the mental resistence and start taking charge of your finances:

Remember the ultimate goal of budgeting is to avoid emergency disasters and drama in your life. Who wants more drama?
A budget can help you sort out priorities in life. It’s about getting the most out of what you have on things that matter to you the most.
Budgeting is a dynamic process which can be altered and adjusted along the way, and you are in control of that.

There are many ways and tools to track expenses and manage your budget, ranging from pen and paper, to spreadsheets, to online software. Try a few and see what works for you. Once you get used to the habit, you may be surprised that “Budget” may just become your next best friend.

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