Monday, August 27, 2007

The truth about budgeting

Research has shown that about 40% of all households maintain a monthly spending plan, or budget. While they make up less than half of us, do budget-users know something non-budgeters don’t? Have they discovered a secret to make budgeting less of a chore?

Unfortunately, no. Here are three truths that I've learned about using a spending plan, and that other users would likely agree with:

Planning ahead is hard. Unexpected expenses come up every month and prices on most things (not just gas) continue to rise. Sometimes spending predictions are off—even way off.

Tracking spending is a pain. A purse or wallet stuffed with receipts is annoying. And even with budgeting software, logging all the information can be time-consuming.

Budgets are "restrictive." Yes, a budget will restrict you from buying what you want--especially if you can’t afford it.

So now you know: Budgeting isn’t fun. But that's true about many things in life that are good for us. Watching what we eat and sweating it out at the gym aren’t easy, for example. But the satisfaction you can get from a trim, healthy body makes the effort worthwhile.

Financial talk-show host Dave Ramsey likes to say that folks who get on a monthly budget often feel like they’ve gotten a raise. Such can be the power of planning and knowing where your dollars are going each month. And that can lead to some fun--that you really can afford--in the long run.

4 comments:

Anonymous said...

I've figured out a way to take a lot of the pain out of it. It takes a wee bit of effort to set it up, but from then on, it's magic.
1. set up a 'fixed expenses' account. Your income gets deposited here, and your bills get automatically taken from here. You don't use an atm on this one - it's only for income and fixed expenses.
2. set up a high-interest savings account with sub-accounts for christmas, vacation, emergency etc. Money automatically goes in there from account #1 above (however much you decide)
3. set up a 3rd account - your discretionary spending for groceries, clothing, entertainment, gas, eating out etc.
A set amount goes into this from account #1 as well. Use your atm card on this one, and check your online balance periodically to keep on top of how much you have to spend.

The result?
1. Your bills are all paid, on time, without you thinking about it.
2. Your self-identified savings objectives are being taken care of right off the top.
3. You can't overspend because you only have a limited amount available to you in account#3.

Lisa said...

Budgeting is time consuming, but so is paying off debt. I am fine with tracking where my money is going, and I usually can find ways to cut back by just keeping an eye on my finances.

Anonymous said...

Implausible, that' s particularly what I was seeking in requital for! You principled saved me alot of work
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Sophie Grace said...

Thanks for taking the time to discuss this, I feel strongly about it and love learning more on this topic. Coming game sims 4 skill cheats to show your school spirit.