This is the first of a planned series I will do on personal finance budgeting.
From personal experience I have come to believe that one of the keys to success in personal finances is budgeting. Now, before you click away from this post please hear me out. I too used to feel that the only thing worse than a personal budget would be knee surgery, a car accident, or some of form of intense physical pain. However, now that my wife and I have worked through the growing pains of budgeting, I know that any pain experienced getting started will be more than compensated by the monumental rewards you reap!
The main resistance people have when starting a budget is the feeling of restrictiveness that gets associated with budgeting. In general, we prefer freedom in relation to our spending--especially when we are talking about fun money. The general thought process is something like, "How can anyone possibly enjoy spending when it is all managed and budget?" Or, "Doesn't that take all the fun out of life?"
So here's the rub. Nothing is more constricting and painful than unplanned spending. Nothing!!! Whether it be a vacation, clothes, or the latest car, when we overspend, or spend out of sync with our cash flow, the price of money increases. We limit our future options, and we bind ourselves to be slaves to debt and worry. Now that’s pain! Why is this? Well, those cash flow gaps have to be filled somewhere, and too often that bridge becomes credit cards, loans from family, and other options that all tend to carry heavy emotional baggage.
Probably at this point you are ready to accuse me of being another tightwad accountant who never spends a penny and never has any fun. The funny thing is that nothing could be further from the truth. Ask my wife. She will tell you that I'm constantly trying to find holes in our budget to fit in one more baseball game, another football ticket, or a seat at an upcoming concert. Oh, and new electronic gadgets, those are needs, not wants! So I'm speaking as someone who wants to overspend. Well, what I've learned is that budgeting allows me to avoid the true pain that accompanies my desire to spend; No more buyer’s remorse, no more spending guilt, and no more interest payments. Instead, if the budget allows for those Yankees tickets, then they definitely get purchased and I never have a second thought about them.
Here are several of the benefits I have experienced from Power Budgeting.
- More control of our spending, leading to less financial stress
- Better communication with my spouse
- Peace of mind that when emergencies come we have them covered
- Increased savings
- Increased investments
- Accurate bank and credit card balances so we aren’t guessing
- A feeling of achievement as we begin to meet our financial goals
For these reasons, I highly recommend everyone take the steps to take control of their spending and to implement a budget.
Keep watching for additional tips on how to build your own Personal Power Budget.