Creating a Budget is the first step into getting your finances in order. It opens your eyes to where your money is and isn't going, and forces you to make a change so that 10 minus 10 does not equal negative 5 (debt and interest on debt).
Not creating a budget is kind of like avoiding asking your parents for permission to do something. You know they are going to say no, so you don't ask and you do it anyway. Then later on they find out you did it, and you get in trouble. You're now responsible for the act you previously committed, and now you have to pay for it in some form of a punishment or scolding. You may not receive it immediately, or they may let the incidents pile up before they act upon a punishment.
It's the same with creating a budget. If you write down your income and the bills you need to pay, you will visually realize you may not have enough money to buy everything you want. Then you mentally have to go against what you know you should not do: go out to eat, buy new clothes, buy that new shiny electronic device, continue paying for services you don't really use (looking at you gym membership!).
For some people that's a harsh reality to face. I know it was for me. Especially after graduating from college and not having a job which paid enough for me to seriously think about paying my student loan debt.
Debt is the punishment (spanking or time out) you receive for not asking permission, and the additional interest you pay on debt are the residual memories you have of that punishment. You still feel the sting or disappointment from your parents, days/weeks/months/years later right? But the next question is, after feeling the sting, did you make a change to avoid feeling it again? Or did you follow the same path? Well maybe Mom might not realize what I did, or maybe she won't catch me this time. I'll be able to make up a good story in the Future if this ever comes up. Eventually, you will pay!
We put a lot of faith in our future for the wrong things. The average American will spend money now, with the faith we will have money in the future, to pay for those items we put on credit. Yet, the average American won't put the same money into Savings, Investments, or Retirement to have MORE money in the future, than they currently have today? It seems like an obvious decision, but we know most decisions are not made based on logic, but based on emotions and impulse.
I am guilty of this as well, much less now than in the past, but again this is a behavioral problem not a problem of peoples ability to think logically or to mathematically resolve the problem. Due to this fact, sometimes we need a catalyst to push us in the right direction. This motivation can come from:
External Sources like a Spouse, a new child, the weather (extreme heat or cold), seeing a friend or family member make a drastic change in their lives, or watching them suffer from not making a drastic change.
Or, Internal Sources like pain, regret, hunger, health issues.
Here are a few excuses I've heard from people who I've asked why they don't have a budget.
Fear of your Financial Reality:
The Fear of knowing you don't have enough money to take care of the bills. As long as you have credit (debt) available to keep you from needing to truly calculate what you can or can not buy, you can continue to avoid the truth. Even income tax refunds keep people in debt. How so? If you expect to receive a large sum of money once the year is over, then your spending habits don't have to be in check. You'll just pay it off next year, right? It's one way of dealing with fear.
Bad idea! That's why there are so many memes out there showing people who bought cars, then months later they were repoed...they had enough money from their refund to get the down payment, and maybe make a couple of months of payments, but they didn't truly budget for the type of vehicle they could afford, only for what they could "pay for" at the moment. Relying on future money that is either not there, or that you can't guarantee will be there, months/years from now, will keep you in this cycle for years. You have to BREAK IT!
I touched on this excuse somewhat above. Pushing off payments on something until you have more money, whether your next paycheck, the raise or bonus you expect to get, the Tax Refund you expect to receive, or anything else that's not a guarantee, puts you in a vulnerable position. You many not receive the exact amount you expected, or it may be delayed (looking at you Government Shutdown!). Life itself is not guaranteed tomorrow, so what makes you think anything else will be that you don't already OWN.
People have told me creating a budget takes too much time. If that's the case, then you probably have too many bills and transactions to track. Every human being has 24 hours in the day, and for the most part we all have a similar set of default needs or bills which need to be paid for each month.
My income varies from week to week, or month to month, so I can't stick to a budget. Actually, you need a budget more than people who have set salaries, or typically work hourly wages where they know how much they will be paid each pay period, give or take a few hundred dollars. Individuals who have fluctuating incomes need to plan the most!
I don't know how to do it. In a world where Google exists, as well as other search engines like Bing or even DuckDuckGo, RESOURCES ARE ABUNDANT! If you search, you can find the answer to almost any question! Most of all, many of these resources are free!
Now that we have the big excuses out of the way, what are you going to do about it? What's really stopping you from creating a budget? If it is one of the things above, or something different, let me know in the comments? These are the reasons (excuses) I hear of the most. An Imperfect Budget is better than NO Budget!
AJ Mobile Money
Husband | Father | YouTuber | Former ATLien
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