Why Budget?

I am not a professional accountant nor am I a financial adviser.  The information that you see on my blog is strictly gained by years of working in corporate finance, experience with friends and family as well as my own personal experiences being a single mother.

There are many reasons why someone would want to make a budget:  saving for a trip/car/college, saving for retirement, getting a better handle on your finances, and the basic need to have all bills paid on time.  When making a budget, it is important to know why you want to have one. 


Lets address a few of these items.

If the goal is to save for a specific thing, there is usually a deadline involved which takes more planning than other types of budgets.  This type of budget has an end in sight and will require self control as well as the willingness to possibly sacrifice things in the short-term to meet your goal.  This means that you will have to be very rigid about how you handle your money and knowing whether or not you have the ability to stick to the budget.  It also usually means no splurging on that new game, night out on the town or that great pair of shoes you saw online.  When budgeting for a goal, you must be committed to the goal and the budget.

When budgeting for retirement, you must know what the amount of money is that you need to have at the end of your deadline.  This is a long-term goal budget which requires great self-control and definitely means that any splurge spending will affect your goal.  This type of budget is directly related to how much money you make.  If you are able to use your company's benefit packages for your retirement, it does make this easier.  However, if you choose to go this route alone you have to be very honest with yourself about what you really want and whether you have the money to get there.  If you want to retire a millionaire but you are 55, you may not accomplish your goal if you don't have enough money left over every month after paying your bills.  You need to be very realistic about this goal because it will affect how you set up your budget.

When budgeting to try and get out of a hole or you have just been so affected by the economy that there isn't another way to make sure your bills all get paid, you will be required to have more self-control and a willingness to sacrifice certain things in your life than any other person who is doing a budget.  I won't lie...this is the toughest budget for a person to hold to.  You cannot spend outside of your budget for any reason other than an emergency.  I have been in this position.  It was not fun but it was worth the sacrifices that I had to make. 

There is one last type of budget, in my opinion.  An awareness budget.  This type of budget means that you want your bills paid, you want to know where all of your money goes and you wan to have money to spend.  Budgeting this way allows you to see where you might be doing wasteful spending.  It lets you see how much you spend on your monthly bills so that you can decide if you want to make changes to your cable bill, your electricity usage or things like that.  It also lets you see things clearly so that you can make better decisions about the amount of money you want to or can invest, how much you want to or can spend on birthdays, holidays, etc. as well as allowing you to feel more comfortable about your general finances.

I will be going into more detail as time goes on and I will be posting additional helpful information on my other pages.