Are You Afraid Of A Budget

[jeffrey]

By Terry Rigg

There's that horrifying word. The one that makes so many people cringe at it's very utterance. It seems like they could make a very good spooky movie with the title "You Have To BUDGET!".

Yeah, that's a little dramatic but I have been helping people with their personal finances for almost 30 years and it's not too far off base. The word scares the daylights out of some people.

You should see their faces when I tell them they are already budgeting no matter whether they have anything written down or not. It's a fact.

Whether you run your budget out of your wallet or on a printed budget form you are still budgeting your money. The main difference is that running your budget out of your wallet doesn't have a plan or anyway to control your spending.

Maybe we should refer to managing our finances as a road map instead of a budget. It doesn't sound quite as bad and it identifies what you are doing more clearly.

Budgeting is exactly like taking a trip in your car. You know where you are and where you want to go but you need a road map to find out how to get there. You are simply developing a plan or route if you prefer.

No one would even consider starting out on a trip to unfamiliar places without a road map. Why would you consider managing your money without a budget?

The reason most people give for not budgeting their money is that it will deprive them of the things that they want. They are right to a certain extent.

If they want something that they can't afford then, if they are living by their budget, they won't be able to get it right now. However, if they plan their budget correctly they will eventually be able to get what they want and know that they can afford it.

Almost all of the people that I have counseled over the years either don't have a budget in place or wouldn't have any idea of how to start one. This is one of the main reasons that so many people are having serious financial problems.




Then you have the people that start a budget and within a few days or weeks it's just sitting in a drawer somewhere. Chances are that the budget they had was too difficult and takes entirely too much time to manage. That's a big mistake.

A budget should be as simple as possible and take only a few minutes on payday to manage. Sure, it does take some time and effort to setup your budget properly but after that you just sit down on payday, write out your bills, make a few notations on your budget forms and do some filing. This is what it takes to stick to a budget.

The best part about having a budget is that you will always be able to answer the question we ask ourselves many times in our lifetime, "Can I Afford That". You will have the answer at your fingertips. Yep, sometimes the answer will be NO!

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Terry Rigg is the author of Living Within Your Means - The Easy Way and editor of The FREE Budget Stretcher Newsletter and Budget Stretcher web site. He has 25 years of experience counseling individuals and families concerning their personal finances.

[Ima saver]

I have been on a budget for over 40 years. I use the envelope system. I put 1/4 of the car payment, electric bill, telephone, etc. in an envelope and I never borrow. I could not live without being on a budget!

[pennywise]

I have budgeted for over 30 years, tells the age ima saver! Oh well, I could not resist that one. Anyhow. I like a budget because it lets me see down the road for those "speed traps". You know, the money is short because I spent all the extra on the way. Well, I put money in CD's to time to the "speed trap". I also like the envelope method for short term expenses like "little ones" school trips, gymnastics, or whatever. To manage your income without a budget is just plain foolish. Great advice there Jeffrey. I like the road map analogy.

[Ima saver]

I agree. I add up all my house tax and insurance and all the car insurances. It comes to about $5000 a year, so I budget $100 a week for those expenses. Then when was of the 4 car insurance bills come in, I have the money set aside.

[Diolla]

I think a budget is a necessity if you want to have control of your money but I have seen too many where the budget is a 'rear view mirror' instead of a road map. A friend of mine does one and then enters in the actual amount it every month. She is always over budget on most everything.

[Ima saver]

With the envelope method, when the money is gone, you are thru spending. I keep no extra money in my checking account, so can't use a debit card at all.

[Bridgette]

Ima Saver,
I'm new to the boards, could you explain to me how the envelope method works, and if there is a place where I can find this info, could you direct me to it.

Thanks so much

[Diolla]

The envelope system is when you put the amount you have budgeted in an envelope marked with the category name, for example $100 for groceries, $40 for gas etc.. then when you purchase something you take the money from the envelope, when the envelope is empty you have no more to spend in that category. Some envelopes build up over time. Some people put the money in their envelopes weekly, some every two weeks, some monthly.

[lillyb]

Am just starting a budget, have for the past 5 months. I cannot believe how much money we use to blow before we told it where to go! Am LOVING the envelope system!! Sure wish I had known about this years ago.

[Ima saver]

I can't believe that anyone but me, uses this method. I fot married in 1965 and back then, I had no checking account and no credit cards.
So I cashed our paycheck each week and put the needed amounts in envelopes. Bact then it was $15 a week for rent, $15 for car payment, $12 for food, $8 for phone and electric, etc. The first envelope was always for savings.
I have to use a lot more envelopes now, but it works just as good as it did 41 years ago. I tried to change and just put it in a checking account about 10 years ago, but it just did not work out for me.
So, it is the envelope system for me, forever!!

[The Budget Man]

6 out of 10 budgets fail!

If I were to quote a bank manager friend he would say that the number is higher.

Budgets fail for two main reasons.

1. We try to take on someone elses budgeting system and it simply doesn't suit either our personality or lifestyle. If you are naturally thrifty then you will organise yourself very differently from someone who is energised by spending.

2. We try to budget without first sorting out our bank accounts. The resulting mess is too complex to handle.

So if you want a budgeting system that works you need to start with a clean piece of paper and do a little research about what the strengths of your financial personality are how best to organise your bank accounts.

Enjoy Your Money
The Budget Man

www.PersonalityBudgeting.com
Budgets that suit you

[casinoroyale]

budget can also be good for not wasting money and spending on something you need