We will begin a new series of posts today aimed at budgeting and why you need one. My goals is to show why there are at least 10 reasons you need a budget and in future posts how best to maintain your budget and adjust it for the inevitable periods where your income either rises or falls. Hopefully for you the former, rather than the latter.
First a little history. My wife and I began budgeting right after we were married. Well really, I should rephrase that, I carried over the exercise in budgeting into the marriage.
I personally had had a budget since right after college and had kept Quicken files to monitor my income, spending and investments for many years. Post our marriage almost 19 years ago, I adjusted our budget for our new union, both in terms of our finances and lives.
At first, my wife resented this intrusion on her financial privacy. In fact, she had a neat nickname for me. She called me the “Budget Gestapo.” Every time I mentioned the budget, she would go “I know, I know it is not in the budget.” Early on, she would even tell me what to do with my budget. Let’s just say that it would be difficult to fit my budget where she wanted me to stick it.
However a funny thing happened in just a short period of time, the budget actually brought marital harmony.
Simple, she was frugal but a bit more of a spender than I. I was well “cheap.”
So the budget actually gave her the leverage she needed to spend all the way up to the amount outlined in the budget. Because we had both been a part of the process of developing the budget, there was nothing I could say about her spending as long as she stayed between the budgeted amounts.
Now those early years took a bit of adjustment between us. However, as I look back, the budget gave us ten benefits that are important to planning anyone’s future. These items were:
A budget helped us plan where our money would go. You must be intentional with your money. Even small proactive steps can add up to big change over time.
A detailed budget kept us on track for bigger, very important goals like adoption, children’s education costs, retirement and buying a home.
It helped us watch and manage waste in our spending. This is done by looking at actual expenditures vs. budgeted and correcting waste or bad habits.
It helped us build new habits and aligned our goals and desires. This is especially important for new couples.
After the initial year, it helped reduce stress. She knew what she could spend and I knew where the line was where I just needed to keep my mouth shut and not complain about her spending.
It allowed us to develop our charitable giving muscles and develop a personal mission. Many of you know that we are both Christians and adoptive parents. Can you guess where our charitable money goes?
It created margin. We were able to pay down debt, accumulate savings and even accrue for ongoing costs (I will explain this in a future post). If something went wrong such as an unexpected $5,000 hospital bill, we could adjust without going deeper in debt.
We were able to grow our savings and therefore look forward to a time in life where we could stop working or at least slow down.
In periods where we had no excess, we were able to maintain our savings because of the budget (more on this in a later post).
Finally, it allowed us to stay away from the destructive mentality that “more is better” and to control our urges to buy or own the latest and greatest gadget or vehicle, just because we wanted it and financing was easy.
I know for many of you the thought of a budget is enough to make your eyes roll back in your head and a cold sweat to break out on your forehead. However, I think you will find that if you give it a try, you too can enjoy the benefits I outlined above, without the type of horror that many imagine when they think of budgeting. In our next post, we will attempt to outline the Basics of Budgeting.
So do you have any good stories about when you started budgeting? Or maybe a horror story about when you tried to start a budget. Please do share!