When most people think of the word “budget“, freedom is not the first thing that comes to mind. Over the years the word budget has become synonymous with words like restrict, ration, and limit. In other words, budgets are not seen in a positive light.
My experience with a budget has been much different than they way budgets are typically portrayed. I believe a budget is very freeing. If you’ve never budgeted, you’re probably scratching your head at that statement, but I stand by it. A budget provides freedom.
A Budget Frees You To Pursue Your Goals
A budget is just a plan. That’s it. A plan for where you want your money to go. It is said that if you fail to plan, you plan to fail, and that is also true when it comes to money.
Say you want to take a vacation to Hawaii next summer. Unless you plan to set aside money every month to pay for the trip, you won’t be taking that trip, unless you go into debt for it. But that’s a whole different post.
You have to plan for your trip. Figure out the expenses. Plane tickets, hotel, food. Add it all up and set the money aside. That’s a budget. A vacation budget.
A general budget is no different. You allocate money toward needs like food and electricity, and then set some aside for wants like vacations or a down payment on a home.
Without a plan, though, too often the money gets absorbed into $100 trips to Walmart. You know the kind of shopping trips I’m talking about. It’s the shopping trip where you can’t remember what on earth you spent $100 a week later.
Having a budget frees you to actually turn your dreams into goals. It’s a concrete plan of action to financially make those dreams come true.
A Budget Frees You From Worry
Making a budget ensures that you have money available to cover your expenses. When you have a budget, you set money aside for unexpected expenses, like medical bills, the spike in your electric bill during the winter, or the new roof your home desperately needs.
When you live without a budget, it’s easy to forget about those expenses that come up once or twice a year, and if you don’t have money set aside, it can create a lot of stress.
But with a budget, there is no need to be stressed. When your semi-annual insurance payment is due, you just write the check. The money has already been set aside for the payment.
A Budget Allows You to Control Your Money
I’ve lived paycheck to paycheck before, and I know the feeling of being controlled by my money (or lack thereof). It’s not fun. Everything is focused on whether you can make the next rent, utility, or medical payment.
When you make a budget, there may be some hard choices at first. Maybe you realize you need to move to a less expensive house. Maybe you discover that drinking Starbucks mochas everyday is keeping you from taking the vacation you so desperately want.
Maybe it’s hard to accept that you can’t have it all. But once you get beyond that point and realize that by cutting a few expenses here can allow you to spend more over there, budgeting doesn’t seem so bad. It allows you to prioritize what is important to you, and then live by those priorities.
Budgeting is freeing, because you make the plan. It’s customized to your wants and needs. And it’s not set in stone. If you find that you miscalculated when you set the food budget, readjust. That’s the beauty of it. It’s your budget. Your money. Working for you.
Tonight on Frugal Coast2Coast (8:30 EST/5:30 PST), Jenn & I will be talking more about budgeting. And later this week, I will be reviewing different budgeting software. If you’d like to look at some of the budgeting software I’ve already reviewed, here’s a list:
- You Need a Budget Pro (my personal favorite, and the software I use for my budget)
- Mvelopes
- Mint
- Wesabe
In addition, if you’re new to budgeting, I did a three part series on budgeting earlier this year that might help you get started.
Do you use a budget? Do you find it freeing or restricting?
Photo by hashmil.
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Great post! When I mention the word “budget” to my co-workers they look at me funny, perhaps with a bit of pity! As you say, people associate that word with sacrifice or restriction….but in fact, I am free from worry, because I know how I am going to make ends meet. So many of our neighbors & coworkers are living way beyond their means and I wonder if they even realize it. Everyone we know is stressed out about money most of the time, especially now that so many companies are laying off workers. I love having a budget…I only wish we had started ours sooner…better late than never! Excellent article!
I couldn’t agree more! We finally started a real budget this month (as opposed to a too-restrictive this is where our money should go but we’re going to blow it failure) and it takes away so many worries. Before, I never knew when I went to the grocery store if we had enough money to cover the bill or not (and the bill could sway from $50-$175 depending on my mood). Now, I know we’ll have enough to cover the $80 a week that we have budgeted. And I don’t have to feel bad about getting something that is more along the lines of a want as long as there’s room in the budget for it. Great post!
When we first started getting our financial house in order budget was referred to as the “b” word. It literally brought terror and tension into our relationship just thinking about it. We finally sat down and completed one together, and to our surprise it was not that bad at all. As you pointed out, it has become a rather liberating experience and a nice time together to plan our future. Great article.
I appreciate the comments here. I would like to ask how one budgets when the income to expense ratio is such that all money goes hand to mouth? How can one budget when you have a family who has cut out practically every frill just to pay rent, car payment, student loan payments, electricity and the most basic of food costs? The above article is great and applies when there is some wiggle room in finances. When there is no wiggle room found, how can focusing on a budget help? When the money comes in, it is already spent and then some!
@Robert – I can certainly appreciate that problem, as I’ve been there before. At that point, the best suggestion I have is to look at ways to increase income, so there’s a little bit of padding. If you can’t decrease expenses, that’s really the only option. Babysitting, odd jobs, selling stuff on ebay & craigslist…sometimes you have to get really creative. When we were in that situation, I took on respite care and my husband started giving guitar lessons.
A budget can help in that situation by making sure any “extra” money, such as from a side job or a tax return, doesn’t get absorbed into regular expenses and gets put aside toward an emergency fund.
In order to become financially responsible you need a budget. You should put together a budget regardless of your financial state. Knowledge is power and knowing how much you spend is important.
I’m happy to have a budget! It is a safety net, in my mind, because I know exactly what our income and expenses are, and we have fewer rude surprises. I’m happy to see the link to my guest post here again. Thanks for this post. I will be interested to hear what you and Jenn have to say about budgeting on Frugal Coast to Coast tonight.
Hi Lynnae,
I couldn’t agree more – having a budget (or spending plan) is the best way to organize your finances and to actively see that you’re making headway. It has been a wonderful tool for our family. We don’t always meet our budget but at least we’re in the ballpark now whereas, before we never knew where our money went. I put our checkbooks into Quicken and it’s so easy to print out and see how we’ve improved over the years on our spending AND on our saving!No more living paycheck to paycheck and nail-biting inbetween!
Blessings!
I am so with you! It drives me nuts that people associate budget with restriction. If you make $1,000/mo or $100,000/mo you still need to know where it’s all going!
I agree. I have financial goals and always felt guilty about certain things, but since I created a budget, I realized that I can set aside money for vacation (a reasonable one, lets not get crazy) while still working toward other financial goals. I set aside a certain amount in my monthly budget that is reasonable to me and I’m able to take a vacation without the guilt that I would have otherwise felt.
A budget also helps with my priorities. I know that I really relax at the beach, and its pretty easy for me to pass up a latte when I think about my upcoming week at the beach. A budget gives you permission to focus on your goals.
We are tightening up our budget. You are so right. It is smart to set money aside for things like Christmas presents, insurance premiums, whatever.
Budgeting works best for us when we pay cash for our groceries. That way, you calculate what you’re spending as you’re spending it and avoid overspending.
Our spending habits should reflect what is really important to us.
I actually have grown to enjoy having a budget. Planning is so simple once you set the budget and it makes it easy to see where your money is going throughout the year.
My issue with my budget in the beginning was it showed me so much of what I was doing wrong. When you run that analysis of where your money is going and then compare it to where you want it to go, it is an eye opening experience. But that was part of my growth: taking ownership.
Thanks for this post! My husband and I finally got over our childhood “budget = restrictions” mentality over the past year or two. I wanted to add one more positive about budgets – they show you things about your money that you wouldn’t otherwise notice.
Our regular budget looks like we end on the positive side every month, even with a second child in daycare as of last year. But for the past few months, that wasn’t happening – we were digging into our savings too often for it to be a fluke. When I did our 2009 budget, I averaged out expenses we pay only a few times a year – car insurance, the water bill (it comes quarterly here) – as well as utility bills that vary seasonally and special expenses – vacations, holidays.
And all of a sudden, I saw it in black and white. And red! We spend more than we make – not monthly, necessarily. But annually.
If not for the budget, we would’ve kept going on like this. But with one, we have a chance to make it right.
I just finished my 2009 budget for all the extras that come up. I’m still working on getting all the money for it but at least I have something workable. I have to be one of the few people that loves budgeting and organizing closets. Budgeting and organizing to me means less chaos. And isn’t that what we are all struggling for.
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great post – thanks!
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We’ve been on a budget for over a year now and I am amazed how we got by before! Because of the budget, our finances are more organized, we have a better picture of where we are money-wise, and we are able to save more. Saving makes everything worthwhile!!!