Should everyone be budgeting?

Budgeting is a financial practice that many financial professionals swear by or overlook. Some believe that it is essential for managing your finances, while others may feel it’s unnecessary. The truth is somewhere in between. In this post, we will explore the idea on whether everyone should be budgeting and what benefits it has to offer.

Financial Discipline

Budgeting forces people to track their income and expenses in detail, encouraging you to get a better understanding of where you’re really spending your money. This could lead to becoming more self-aware of your finances and lead to smarter spending choices. I would relate budgeting to running a business. With a business, you want to understand where every penny is going and understand where it’s being spent. This leads to financial reports every month and reconciling your accounts to ensure accuracy. At most people should be spending an hour a week or a few hours a month to prepare a budget, learn more about you’re spending, etc.

So, should everyone be conducting their finances like a business?

Well…it depends on the situation you are in. If you are living paycheck to paycheck and worrying about your next rent payment, or credit payment… (do not say you’ll just pay it next month… 🙁). Budgeting could be a great option to explore where you should cut back on your spending and where you could save. For example, budgeting can help people realize the allocation of their spending between fixed costs and variable costs. Fixed costs are the costs that you have limited to no control over, food for example, we all must eat…and hydrate, that’s important too. While some may argue, an example of a variable cost could be your rent payment. You have control over where you live for some, for people who rent, it’s possible to negotiate your rate before joining that apartment complex. Through budgeting, you can learn how much of your income is being spent before you even see it.

If you do decide to start budgeting and keeping track of your income and expenses, credit card companies keep track of most of this information for you. Paying cash on hand is the only transaction you would have to manually enter your budget, which would make your life much easier.

Well, maybe I don’t want to budget…

That is perfectly okay! Budgeting is not a one size fits all solution; it can be a valuable tool to help many individuals as they work to achieve their financial goals. Time is the number one reason a lot of people decide not to budget as it takes time out of doing other things like hanging out with your family or friends, it can also be very stressful learning more about your personal financial situation.

Most importantly though, if you decide not to budget, I hope you decide to learn more about your finances and learn to be financially responsible, live within your means, and plan for a secure financial future.