What does a “Budget” Mean?
There are many ways to define what a budget means. If you take the U.S. government, regardless of political stance, it means spending 3-5 times the amount of money you bring in from taxes. If you listen to Dave Ramsey, he tells you to use Zero-sum budgeting (i.e. Every dollar is accounted for and at the end of the month you have $0.00 leftover). If you listen to The Money Guys, they will help you understand your army of dollars to maximize funds in retirement. To the local Mom & Pop shop on Main street, it means having a delicate balance between soaring food costs, due to inflation, paying worker’s wages, and having enough profit to keep the business running in lean times (i.e. pandemic).
For most people, they see a budget as a rigid and unforgiving way to spend their money. After all, it is their money and they want to spend it on things they want. While this is certainly a true statement, it is also an incomplete story. The ONLY way you get to spend your money on the things you want, is if you are debt free. Otherwise, you are just paying someone else for “your stuff.” The average auto loan in the U.S. is now at a staggering 65-72 month (5.5-6 years)! The absolute worst thing you can do when buying a car is to tell them your monthly budget (sign up for a coaching session to learn more!). If you do not actually own “your stuff” free and clear, then you likely are afraid to budget.
Budgeting requires us to get intimately familiar with our money and that shakes some people to their very core! However, most Americans are in more debt today than at any previous time in U.S. history. We, as a whole, refuse to come to grips with the debt we have gotten ourselves into, and history has shown us this leads to catastrophic results. Having a budget simply means that you have a plan for your money. You know what bills are due, how much your mortgage/rent payment is, how much you can spend on groceries and/or dining out, and how much you have charged to your beloved credit card (said sarcastically!).
Budgeting doesn’t allow us to hide from reality and try to fool our brain into thinking money doesn’t matter. It means we are mature enough to understand that money is finite for everyone and that all debt has to be re-paid. Having a budget does not mean you are unable to go shopping, go out for Happy Hour, or go on vacation. Having a budget is what ALLOWS you to actually do those things, responsibly of course. Since money is a finite resource (like oil and water) it would be completely irresponsible to treat it as though it is an infinite source. Many marriages and businesses have ended because proper Budget Basics were not used to have a healthy relationship with money.
I start all my clients off with Budget Basics, even if they have a $1M net worth! If you were to spend $100K per year (not accounting for inflation) $1M will only last 10 years! By using the Budget Basic steps we can understand, in detail, how you spend your income and whether any changes need to happen. Writing down each expense throughout the month in a notebook is a very easy way to see where your money is going! At the end of each day, review bank/CC apps, store receipts, gas/diesel receipts, food/grocery receipts, etc. and just write them down in a notebook. It honestly takes no more than 2-3 minutes, and since you are reading this blog I am sure you have 2-3 minutes to spare!
If you are unsure how to start budgeting, just Ask for Help! Blue Collar Budgets is here to help as many individuals and couples that feel like their finances are weighing them down. I love getting to know my clients and help them reach their level of Financial Fitness using our 12-step program for success!
