Budgeting

"It's clearly a budget. It's got a lot of numbers in it." - George W. Bush

I've heard that one of the most important financial principles there is involves the maxim "don't spend more then you make." Although it doesn't surprise me that many people choose to ignore this (after all, what else would credit cards be for?) it does surprise me that many people actually have no idea if they are spending more then they make or not. The truth is that some people just don't keep track of their spending at all. What do you do? Check out my poll on the sidebar.

Ah, tracking what you spend. There are a couple of ways to do this. My friend Jonathon told me that he and his wife have 5 different jars (one for house, one for car, one for food, etc). At the start of the month they distribute the money they have into those jars. If the money runs out (or is about to) they know they've reached their financial limits. I don't personally like the method, but I think it does what is needed; it tracks how much money is coming in and out.

Another way to do this is to budget your money. I don't know how many of you have a personal or family budget but I do know that they are extremely helpful. Pretty much any organization that has more then 5 members has some sort of budget (businesses, charities, churches, governments) and yet its remarkable how so many people submit themselves to a personal budget. Why not I ask?

My guess is it's too painful. Budgeting is tough because it takes time to save and add up receipts. It's also tough because you can't just spend whatever you want (or feel you need to) anymore without feeling guilty. Ignorance is bliss afterall. When doing premarital-counseling, I find that one of the topics that is the most hated and resisted is budgeting. Couples look at me like I am trying to ruin all their fun! It's no wonder that one of the top 3 sources of marital conflict is money.

For most people, it takes about 4 months to move from not budgeting to budgeting consistently. If you have never done it before, it may seem impossible to track every thing you buy. But its worth it. Once you get into it it becomes a habit and a discipline that actually brings freedom. How you ask? Because you only have to feel guilty when you truly deserve it. You know quite accurately where you are sitting and when changes have to be made. Also, you can plan for things like giving, saving, and other noble efforts. I often hear the excuse from people that they don't budget because they don't know exactly how much money they are going to make that month "I'm not on a salary you know." I'm a waiter and Jobina's income from babysitting varies quite a bit but we have successfully kept a budget (just budget low) for about 10 years now. If you don't currently keep track of your income/expenses, why not start budgeting? It's not as scary as it seems. And if you don't like budgeting, there's always the jar thing . . .

The Truth About Budgeting
12 Reasons Budgeting Can Improve Your Life
Guilt-free Budgeting: No Blame, No Shame

May Light increase!