Are Budgets Really Bad?
Isn’t that the most ridiculous thing you have every heard? But in reality, that’s how budgets are treated. Like an afterthought. Like something you resort to, when your pants don’t fit. Let’s compare having a budget to being in really good shape! Have you ever seen a trim, fly gal who exercises regularly, and eats healthy? Sure you have! My sister is a great example. She loves how running makes her feel in body and in spirit. So, she runs daily. She is fly and trim. You know what people say to her, “You don’t have to work out, you're so thin!” From this vantage point it’s easy to see how amiss that advice is. She is thin because she works out. It’s exactly the same with budgets.
Budgets have a bad rep. In popular culture, they are all the way down there with diets. However, hold your judgments for a minute and imagine them as a magical map to wealth! It is easier to see this magic if we eliminate the emotional element. Personal finances can be very emotional. Since business and personal finances are essentially the same, I’m going to ask you to imagine we are talking about a business.
Can A Business Succeed Without a Budget?
Now, from this perspective, how successful do you think a business would be if it operated without a budget? If the owners didn’t know how much they spent or, more importantly, how much they could spend, and still make a profit? It would like trying to drive blindfolded! If you can’t see how much you’re spending, it’s almost impossible to know if you’re making a profit. Your personal finances are essentially the same.
Don’t you want to get a little ahead each and every month? So that you have something to show for all your hard work over merely surviving? The easiest way to achieve this is to have a budget. A budget allows you to see how much you’re going to spend, before you spend it! This is essential. How can you possibly capture saving, consistently, if you don’t know how much you're spending?
Do You Know How Much You're Spending?
My guess would be no. That might sound pompous, but, 99% of my client have a huge gap between what they think their spending is and what they are actually spending. If you're game, download this expense sheet and fill it out. Then add your primary checking account to Mint. (Worried about security? Check out this post.) It will highlight your spending for the last three months. How do these two number compare? The average difference between my clients' estimated numbers and their actual numbers is $2,093! I know it sounds unbelievable, but it’s true. Do the exercise! It will take 30 minutes tops, less than a Kardashian episode. But it a thousand times more rewarding. Do it now. What did you find? Need help deciphering the info? Let me know. I will be your guide.
Thought this was valuable please share? It’s a damn crime that we don’t talk about money.