Do you Need a Budget?

“Anyone who lives within their means suffers from a lack of imagination.”

-Oscar Wilde

I’ve always been a free spender, so I thought I’d try something new and actually check all my personal expenses for the previous month.  I knew it would be painful, so this is something I’ve been avoiding for a while.  What I saw was not surprising:  lots of money spent on groceries, restaurants, and monthly fees that I don’t need.  I spent over $750 a month on groceries and restaurants.  That’s insane – especially for a single person.

So for the first time in my life I tried using a budget.  I’ve always hated this idea because I thought budgets were boring and unimaginative – hence, the quote above.  I think most people don’t like the idea of a budget because they think it will limit their expenses and they will have to give up their luxuries.  The result is just the opposite – A budget will give you control of your finances.  It will make money work for you, instead of you working for money.

Here are the benefits of a budget:

1)  Smart Spending:  Having a budget will make it easier to shop.  When out shopping, you will always be tempted to spend money, but a budget will help you realize that you are stronger than an advertisement.  I  find myself taking the time to compare shop at the grocery store and actually buy a generic brand for once.

2)  Treat yourself:  A budget (that you stick to) will lead to rewards.  Whether you are budgeting for a vacation or a new Droid phone, you will see the benefits.

3)  Stress Relief:  There will be no surprise expenses in your bank account.  You will not fear when that big check will clear.  You will save money in overdraft fees.

4)  Build Wealth:  Using a budgeting software can help you save money.  Every dollar you make will have a specific job to do.  Money will be set aside either to pay off debt or invest.  Either way – your bank account will be growing.

5)  Control:  You are in the financial drivers’ seat.  If you’ve prepared a budget properly, then you will know in advance how any spending will affect your financial position.  This can give you confidence and a sense of well-being knowing that you can make informed choices now.

6)  It’s fun!  Maybe this is the nerd coming out in me, but it is fun to track expenses to see how much money you saved.  I saved over $275 a month on groceries alone in my first month on a budget.  Saving money is not fun if you don’t track it.  However, if you can see that savings on paper – it makes it much more real.

Savings from my first month on a personal budget:

Groceries:  $279

Restaurants:  $115

Unnecessary Monthly Subscriptions: $159

Total Money Saved:  $553

 

What Software I use:

I’ve been using the software program: You Need A Budget.  It’s very simple, intuitive, and easy to use.  Just check out the ratings on Amazon.  I've attached a video below.

I also just read a great book by Dave Ramsey called, The Total Money Makeover.  It's a simple but powerful book on money management and staying out of debt.