One of my (almost) 4 year olds favorite things to watch is a short from Toy Story 4 called “Forky asks a Question”. It is where Forky asks questions that people are afraid to ask because everyone is supposed to already know the answer. As a Financial Coach I ask people all the time if they have a budget. Most people say yes, because they feel they should. However, I find that most people don’t have one and don’t even really know what the purpose of having a monthly budget is. So today I’m going to answer What is a Budget?
A budget is just a plan for how you’re going to spend your money, before you spend it. You are taking control of your money and giving it a purpose. It is giving your money a job to do each month, whether that is paying bills or buying food or to have fun. When you have a monthly budget, you will know where your money is going each month and stop wondering where it went.
I hear lots of excuses for not budgeting...so here are 4 Budget Myths:
#1: Budgeters don’t have fun or buy nice things. You choose how you want to budget your money. If you want to budget for fun or nice things then you can (and you should). However, you want to make sure you’ve covered your necessities before you spend on the luxuries of life. A budget allows you to do just that.
#2: Budgeters have to be good at math. You don’t have to be good at math. There are many different programs that you can use to budget and they will do the math for you. You just plug in your goals and your spending and it will do everything else.
#3: Only people struggling with money need a budget. Nathan and I have been budgeting every month for over 11 years! And we’ve only struggled with money part of that time! However, even if you have enough each month, you should know where your money is going so that it can be working for you (gaining interest or paying off debt). It allows you to be in control of your money, whether it’s a lot of money or a little.
#4: Budgeting takes too much time. You can’t afford not to budget. In the beginning it will take more time, but as you get better with it, you’ll get faster. Plus, if you’re using a program to budget, it will carry over your work from month to month.
All of your income for every month should be budgeted. Your income minus your outgoing will equal zero each month.