Here at How I Save Money I use a budget. I recently read a post that said Why You Do Not Want A Budget . I think this is one of the worst pieces of advice you can ever give someone, especially if they have debt.
This is honestly a rather disturbing article to me because it states that your finances will take care of themselves without any interference on your part . Now while I agree that there comes a point where your finances will be automatic you will still need to check up on things every once in a while to make sure that everything is running smoothly. You will need to do this in cases where you get a bonus or need to make an extra payment on something.
Baz from Life Of Baz actually has a budget and uses it..until the one time it failed him. He got so dependent on technology to track his finances that he never noticed that Money was not alerting him that he was over budget. Since he was not getting the red flags he assumed that he was right on track.
He looked under his budget today and noticed that he was actually over his budget on many items . Now this was not a big deal because he has discretionary income that can cover the excesses and he does not have to dip into savings or go into debt.
If he was in a situation where he did not have this free cash flow or an emergency fund then he would really have a problem. He would have been over his budget and might have to incur debt to cover his daily living expenses. Having a budget keeps you on track to know what you have coming in and what you are spending so that you can manage your money better.
His budget showed him that he was overspending on some areas that he could really cut back on and it also showed him areas where he was saving money so that he could use that savings to get the things he really wanted.
A budget does not mean that you are in a financial straight jacket but it does mean that you can monitor what you are doing so you can see that you spent $250 on dining out in one month….which is bad when you have a humongous amount of loan money to pay back for example.
Having a budget can show you ways to save money because you can find areas that you are spending more than you should and cut down on them.
I think that you should use a budget in order to help you manage your finances. It is just a tool to set you on the right path and I do not believe that you would be a slave to your finances as that other writer suggested.
I agree with you. A budget helps you keep track of where your money is going. If you operate without a budget you have no clue what is happening to your money. If you want to get ahead financially you need to start with a budget.
I didn’t even have to read that other post to know it was total garbage advice. I agree with you totally, a budget is a necessity. You can’t just set your money free and hope it figures out the right thing to do. That has to be one of the most wreckless things I have ever heard!
I am glad you agree with me here and even though I hate driving traffic to that ridiculous post I think you should go read it.
Then read the comments.
I am so surprised at the number of people who agree with the writer and the reasons they give. The sheeple who agreed made me nuts!
I just read the article… pretty interesting. Budgeting didn’t seem to be the focal point of his article, but more about finding happiness in life and health concerns. I agree that money doesn’t buy happiness and all that, but there are things in life I would like to have and experience that DO require money. Seems he just wrapped it with a “budget” heading.
He did mention doing budgeting for years… which I am certain helped him out financially when he experienced his heart attack. Maybe he has enough money now and forgot that budgeting was how he got it in the first place.
Without my budget and tracking sheet, I wouldn’t have been able to pay off almost $40k in about a year, and saved $18k in retirement.
Seriously, budgeting and tracking your expenses but also looking at them to make sure you aren’t over budget are KEY things.. I didn’t like Mint, Wesabe or any of the free budgeting things because they didn’t sort out my budget categories the way I had envisioned. The excel sheet I created was exactly the way I wanted it.
Having read the article, I don’t really think that he is saying that budgeting is bad. Rather, the focus seems to be on not losing sight of the forest for the trees. Shugars seems to be saying that you need to look at various areas to see if you really need to spend in those areas to be happy.
@ Fabulously Broke’
I use Mint but just because it makes the graphs and I don’t have to mess with them. My main tracker is also an Excel spreadsheet because, like you, I can classify everything exactly as I want it.
Congrats on paying off all what you did in one year. Very inspirational!
Having a budget is very good to maintain your expenses to the minimum.
I read that other article and felt it made no sense, at least not to anyone who is not debt free. Everyone needs a budget, I even recommend it for people who are debt free. Even lottery winners (the smart ones) go to the experts to have their money managed, which is just a higher form of budgeting.
Not having a budget in place is quite disturbing for me as well. I don’t think I will ever have peace of mind without me knowing what exactly do I have to pay for things. I do know some people, however, who do not like the idea of having a budget because it kind of restricts them in a way. In my opinion, that’s how you go broke. By going on a worry-free spending. Not a good idea.