Why does the “b” word get such a bad rap? It’s not a four-letter word. Nor is it a quaint concept of days gone by. But your grandparents probably did it, your parents too. And you absolutely should do it.
It is just as relevant today as it was when your grandparents did it. In fact, my husband and I do it at least once a month.
What is this thing we do? We budget.
Everyone who has money should budget. Including you.
Here are 9 signs that you need a budget ASAP:
- You wonder how other people got wealthy. A budget is the keystone in your wealth building plan. In order to build wealth, you need to keep some of the money that you earn. If you don’t decide at the beginning of the month how much money you’ll keep, it’s going to slip through your fingers. In order to build wealth, you need to consistently keep money and make it work hard for you while you are working hard.
- You check your bank account as often as your Instagram. There’s absolutely no reason to obsessively check your balance, unless you are worried about something. Are you worried your Amazon Prime order and the electric bill are going to collide and cause an overdraft? Are you sweating your payday so you can make the car payment on time? If that’s the case you are living uncomfortably close to the edge. A budget will tell you at the beginning of the month where your pinch points are AND how to prepare for them.
- You have less than $1,000 in a Rainy-Day Fund. But you’re like “Alyssa, I don’t have any money left to budget, so how can I save money?” If you make money, then you have money to budget. No one wanders into saving $1,000. You do that by telling your dollars where to go at the beginning of the month, before the month starts. Stop your daily trip(s) to Wawa on the way to and from work and re-allocate that money to a Rainy-Day Fund. Sell some stuff and put that in the budget as part of your Rainy-Day Fund. Take an extra job and put that paycheck in the budget towards your Rainy-Day Fund.
- You always mean to spend less. If this strikes a chord, you know the disappointing cycle of making a quick promise before you walk into a store. It might sound something like “I wasn’t going to buy anything today, but there’s a sale and I swear this time I’m only going to spend $100.” And then, you get to the check-out line and somehow $500 worth of stuff jumped into your shopping cart. That cycle traps you, your money and your emotions. There is freedom in a budget. Freedom from worry. No more praying in the line at the grocery store that there’s enough in your bank account. You decide before the month begins how much to spend, and then you live the plan.
- You don’t know how much your spouse spends and vice versa.If your spouse doesn’t know how much your spent on online shopping and you don’t know how much your spouse’s cell phone bill is, you need a budget. Budgets bring sunshine and transparency to your household expenses. How can you and your spouse work towards a financially secure future if neither of you talk about today’s expenses?
- You don’t know how much money you spend on “wants” each month. If you don’t know how much money you spent on impulse purchases last month, you need a budget. And impulse means just that …. breakfast as Panera, a spontaneous trip to Target, or random shopping at Home Depot. If you don’t know what you spend on things like this, your hard-earned dollars are running around like cats in a rainstorm.
- You make good money but it doesn’t feel like it. If you are wondering where those hard-earned dollars go ever payday, it’s time to get control. Chances are very good that debt is weakening your saving power. Stop putting things on the credit card. Write a budget and only spend what money is in the bank to make your purchases and pay your bills.
- You use credit cards or payday loans to pay for important things like food or the electric bill. If you do this, you live very close to the line. And if you financed your home and vehicles, there’s no room for error. Either you don’t have enough money for the month or there is a bill payment timing issue. Either way, it’s up to you to plan the inflow and outflow of money through your life. Payday loans will create a financial death spiral that is almost impossible to escape without a budget.
- You dread expensive things in the future. Do you shudder thinking about kids’ college, replacement car, home repairs, medical bills? Yes, these things are coming. Act now. Do not let another day or paycheck pass you by without having a spending plan. A budget tells the only dollars you’ve got what to do. Make a budget and start directing some of those dollars into savings accounts, health savings accounts, 529s and 401ks today. The more time you have, the easier it will be. Time is the magic ingredient to saving and growing money.