There appears to be a stigma about budgets. It has become a dirty word to many.
People tell me budgets are restrictive. They can’t do what they want if they have a budget. A budget is limiting. It is controlling.
Who would make your budget? Your mom? The mailman? The guy next door?
YOU make your budget!
Since you make your budget, you can put whatever you want into it.
Yarn habit? Yup!
Action figure collection? Sure!
Want to go on vacation? You can budget for that too!
The only limitation on your budget is your income. Now for some people that might be a problem. For the vast majority of people I council, they make enough money to pay all their bills and there is money left over.
It’s time to take control of your spending!
Where did all my money go last month?
Have you ever asked yourself that question? Those of us on a budget never need to ask that question because we made a spending plan before the money went out the door and tracked our spending during the month to ensure we stayed within budget.
Can you budget for fun things? Absolutely, just make sure your budget aligns with your goals.
If you read the blog, you know our goal is to get out of debt. But that is really just part of a bigger goal. My husband would like to transition out of his full-time job at 55 and focus on his passion. In order to do this, we need to pay off our debt so we can ramp up our retirement savings. We have chosen to make this a priority so we made the decision to cut back on other things.
Do we still budget for some fun stuff? Of course, but that budget is very small compared to our total income. We each get $50 per month for blow money (some people call it mad money). We can spend this on whatever we want. We also budget $100 per month for entertainment. This two items combined represent about 2.5% of our total budget. Typically, we don’t even spend it all, but it gives us breathing room to have a bit of fun while we are on this journey to become debt free. It also doesn’t stop us from achieving our goal. Currently about 50% of our take home pay goes toward our debt snowball.
What are your goals? Does your spending reflect those goals? If not, a budget could help you get there.
You can read more about how to construct a budget here.
Just remember that a budget is just a spending plan. You design it. You control where your money goes.