If Your Budget Isn’t a Stress Reliever – You’re Doing It Wrong

by Will Lipovsky · 8 comments

I will be honest because personal finance must involve an honest conversation. Though some personal finance sites might compare needing a budget to needing air or food, I don’t plan to be that melodramatic.

I will, however, emphasize that I think budgets are essential to maintaining financial order in your life.

A budget can be as simple as you make it: add up your fixed expenses (car payment, rent, utilities, savings, etc.) and subtract that amount from what you make, resulting in how much you have to spend on food, gas, and other expenses. Or, you can make your budget more detailed and try to account for each of these things and give yourself a ceiling amount, which you try to stay under each month. For this budget, if you have money left over at the end of the month, you can choose to spend it or roll it over to the next month’s budget.

Regardless of the way you choose to organize your budget, the point is to make sure to have one because it can make your financial life a lot easier. Even if you mess up and have scratch marks (or lots of “Select All” and “Delete” options chosen in your queue of actions) all over your budget, again, the point is to have a budget and that you are trying to make it work.

Budgets, by nature, take a lot of trial and error and editing in order to make them work. And this trial and error and editing may occur every month as your income or expenses change. That’s normal, expected, and helpful; this editing will force you to look at your budget and come to terms with your finances. This is the first step to changing your habits for the better.

If you don’t have a budget, though, you may not know that you are headed for financial peril. If you use credit cards, it can be dangerous to pay less than your full balance due every month, especially if you don’t have a budget to monitor how much you can allot toward the credit card in the first place.

Say you charge a high expense, forgetting the shopping trip you went on two weeks ago or the medical bill you had to pay on the first of the month. These expenses can add up to an amount above not only what you expected, but above what you are able to pay.

Credit cards make it easy to accumulate debt as you are not required to pay off the balance every month. If you don’t, however, interest will grow on your balance at astonishing rates. Credit cards are known for their high-interest rates, which is why it is so easy to fall down the rabbit hole of debt so quickly with them.

As a result, you need to make sure your spending is on track for the month before you pull out a credit card. This requires discipline and focus; it requires a budget.

Budgets can not only save you from financial distress, but they can help you plan for upcoming expenses that might stretch your bank account if you wait to take out the total needed at once. Is Christmas or Hanukkah coming up, along with work and family holiday parties you need to buy gifts for? Do you and your family want to take a trip to the beach or Disney World next year? These are expenses you can easily plan for ahead of time with a budget. By spreading out the amount you need to save over several months or a year, you can ease the pain of a significant transaction. Building these expenses into your budget as small amounts make it more manageable and less stressful when the time comes to actually spend the full amount.

Budgets don’t take long to set up and they take even less time to maintain as long as you actually put effort into them. It can help save you and your finances from most problems that will arise as you go through life too. If you don’t have a budget yet, I strongly suggest you start one now.

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  • Brad says:

    Budgets really aren’t restrictive like most people think. It’s the amount of money available that creates the restriction – a budget just allows you to allocate priorities. My wife and I find that living by a budget actually creates more freedom than without. If we have money in a category, we’re good to spend it, without a big discussion or stress or concern.

    • David @ MoneyNing.com says:

      Good for you to see the light. Many people stop before they even try it because they are too lazy to track their expenses. As with most things in life, those who spend the effort will reap the rewards!

  • Mr Home Maker says:

    I used to think having a ‘sorted’ budget would be exciting…… but it is actually very boring. I learning to love boring.

  • Dannielle says:

    For me, it feels strange to make some purchases without consulting my budget and it makes me nervous. Am I spending too much? Can I afford this? How will it affect my finances?

    • David @ MoneyNing.com says:

      I guess I do this too, not because I actually open the spreadsheet but because I have pretty much most numbers memorized! It’s freeing to know before you pay that you’ll be able to afford it, so a budget is definitely useful for people like us.

  • Jonathan Dyer says:

    Great points. Budgets should absolutely evolve and change as needed and I feel that’s something a lot of people don’t quite understand.

    You also point out what is a sad reality about credit cards: they make it too easy to badly manage your money. They allow you to overspend and not feel the pain until it’s too late. Even though plastic is most prevalent today, I think paying cash when possible can also be helpful for keeping a budget.

    • David @ MoneyNing.com says:

      For sure Jonathan. I am just back from a trip to Asia and I was constantly feeling like I overspent because I had to continually go to the ATM machine to get cash. With plastic, I would’ve happily spent the same amount without feeling a thing.

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