Budgeting is something that a lot of people don't love to talk about. Having [and sticking to] a budget means saying no sometimes to things that you want. And yet, having a basic budget, being familiar with it and sticking to it is really the first step to managing your finances well.
And now maybe you're thinking, "Ok, but do I really need to have a budget?" (YES!) or "Can't I just be sure to spend less than I make and let that be that?" (YES, BUT...)
I could talk and talk about budgeting and why you should have one, but ultimately I realize that it really will be up to you. To make a budget out of compulsion, or because some silly blogger is telling you to won't do much good. You'll have to decide that it is something that you want to do because you see value in it.
I've been thinking a lot about budgeting
We budget to be good stewards of the resources we've been given.
Having a budget is the foundation for strong financial management. There are countless articles out there that speak to this (One of my favorites is "Who Needs a Budget?" by Forbes Magazine.) That said, the basis for our budgeting is found in scripture. The Bible is pretty clear that all that we have is a gift from God. "What do you have that you did not receive? And if you did receive it, why do you boast as if you did not?" 1 Corinthians 4:7b
We want to be good stewards of what we've received. This means that we not get too caught up on things of this life, but that we seek to bring glory to God in the way that we spend, save, and give our money. Your budget reveals your priorities. I've always heard that if you want to see what someone actually values, you should take a look at their bank statement...what are they spending their resources on? By creating a budget, we are able to clearly see where our priorities lie and adjust them as needed. We can also see areas that we can cut back on, or add more to depending on various circumstances or needs. Having an attitude of stewardship and not ownership helps us keep these priorities in order.
We budget so we can create realistic goals (and a plan to meet them).
Early in our marriage, we began setting goals for things we'd like to accomplish. Whether it was to buy a new (to us) house (which we did in March), or get a newer car, go on a fun vacation, or to have a plan in case one of us suddenly lost our job. Our budget has helped us tremendously in creating these goals as well as allowing us to think of appropriate time frames for them and action steps to accomplish them. We knew, for example that we wanted to buy a house, if we found one we could comfortably afford before the lease ran out on our apartment. But, we also knew that one of our cars, had more than 180K miles on it and would likely need to be replaced within a year and a half or so. (It's still going strong though...). Our budget helped us see pretty clearly that we wouldn't be living in a mansion for our first home, and that we probably won't be driving a brand new luxury car when we do have to replace one of our vehicles. But, it also helps us see that if we want to have X by a given date, we need to start saving up now. And instead of just guessing how much, we know exactly how much we should be saving each month.
We budget to hold ourselves accountable.
Having a budget holds us accountable for our spending decisions. Because we track all of our spending, and assign all of our purchases to their own categories (such as groceries, personal, home, etc.) there are really no secrets when it comes to our spending. We go over each of our budget categories throughout the month and can see if we are spending more than we should in any given category. I never have to feel guilty for buying fun things just for me, and likewise for the hubs since we are aware how much is allotted for those purchases. And if we want to buy something that puts us over, we have a conversation about it and if we agree to buy it, we'll both usually also agree to spend a little less on ourselves.
We budget to help us make quick decisions.
I think this one is very important. Having a budget answers the question, "Can we afford this?" before we even ask it and that makes our decision making so much easier. We are able to enjoy ourselves and do fun things without worrying if there is money in the bank. Likewise, we are able to say no and walk away from things when we know they do not fit in the budget. And because we are certain that we can or cannot afford something, we don't have to deal with remorse of buying it or not.
We budget to avoid money-fights with one another.
Finally, we budget to avoid money-fights with one another. Financial arguments are one of the top reasons that couples fight (so we've been told) and we want to do everything we can to protect our marriage from that. Having a budget that we created together and stick to together, talking about our goals and priorities helps us stay on the same page as far as our finances are concerned and really cause us to stick together like a team instead of each of us trying to get more for ourselves. While we certainly have different spending habits (I don't think the hubs will ever care about frozen coffee or shoes or ice cream as much as I do), we know that we can trust one another to make financially sound decisions. I know Bryce is not going to go blow the budget on something crazy and he knows the same of me. And when we do need to cut back, it's something that we do together.
So that's it. The top 5 reasons we budget. I am certainly not a financial expert, but I enjoy learning. Do you have a budget? What made you decide to create it?
Next week, I'll be posting Part 2 of this series: How we made our budget. Stay tuned!!