What Is A Budget?

budMany cringe when they hear the word budget.  Some think the only other word that starts with “B” that might generate a worse reaction is the word bankruptcy.

I hope to explain that the word “budget” is not a bad word.  It is not a controlling word.  It is not a word meaning “you can’t have.”  I hope to explain that the word budget is a way to take back control.  A word that means freedom.

Merriam-Webster online defines the word Budget in part as: a plan for the coordination of resources and expenditures, the amount of money that is available for, required for, or assigned to a particular purpose.  Basically, it is a plan for saving and spending.

So a budget is nothing more than a plan. A road map for your money. It is a way to spend your money on paper, on purpose before the month begins.

There are many who don’t work a budget because they don’t want to feel controlled, but without a budget you are controlled…you are controlled by your money.  Wouldn’t you rather be in control of your money?  By making a plan of where your money is going to go, you are taking back control.

Let me ask you, would you rather be controlled by an outside entity such as a credit card company or would you rather take control of your money by making a budget?  Laying out a plan that you control?

A budget should be looked at as freedom, the freedom of you taking back control of your money.  It is you spending your money with intention, giving you the freedom to choose where your money will go before it is spent or before it starts to control you. Being pro-active instead of re-active.

Here are some tips on budgeting:

  1. Be patient, it will take 3 or 4 months for your budget to start working. Don’t expect that your first month of making a budget will be perfect…It won’t be. As with anything worthwhile, it will take practice before you get the hang of it.
  2. On paper, spend every penny before the month begins.  Spend means paying yourself as well, don’t forget about putting money into savings.
  3. Always budget more for groceries than you think you need. This is a gotcha category that many people underfund.
  4. If you are married, you need to work together as a team during the budgeting process. This isn’t about giving budget control to one spouse and whipping the other spouse with it. You both may need to loosen up a bit and/or perhaps tighten up a bit. Usually there is one spouse who is a spender, and one who is a saver, this is good as it is a time to compromise with each other. Budgeting with your spouse opens up the communication as well, what an extra bonus.

A good resource for getting started is Dave Ramsey’s book The Total Money Makeover: A Proven Plan for Financial Fitness

So you see, the word budget is not a bad word, it is a transforming word, a plan, a path to financial freedom.