I have worked with small businesses, non-profits and individuals on their budgets and the thing that always stands out to me most is that almost no one really understand what a budget actually is.
In this post we’re gonna take it back a few steps to make sure we’re all on the same page when it comes to talking about budgets.
The Basics
Essentially, a budget will look at your income and give a name to every penny. A budget will take every dollar you expect to receive and tell it where to go. Your money can go to an expense account, to pay off a debt or towards a savings goal. Here are common budget categories.
What a Budget is Not
A budget is not a strict or rigid path. It is not the law and it certainly is not a set of rules that you have to abide by.
Often times I find that people want their budget to tell them exactly what to do. But I believe that this is the number one reason people can’t or won’t stick to their budget. Because it’s zero fun to have to pull out a spreadsheet or budgeting app multiple times a day to see where you are and what you have left to spend.
Like, yuck.
So, What is a Budget?
Here’s the deal – a budget is your BEST GUESS at where you will spend your money.
That’s it. (I know, right – kinda loosy goosey, if you ask me).
But really, there is no way to know exactly what is going to come up for you. Which means that there is no way to know, precisely to the penny, how much money you are going to spend in every single facet of your life.
So, if that’s the case… why are people so hung up about budgeting?
I think the real issue with budgeting is that it makes you take a hard look at your money. It forces you to look at areas that you might be avoiding. Maybe because you think you’re bad with money, or maybe because you wish you had more money. Or maybe you just don’t want to face that fact that you have some mindset issues around money.
Whatever the reason you’ve been avoiding looking at your money, what you really need to do is just get started with a budget. It doesn’t have to be complicated. In fact you can create a budget in less than an 30 minutes with the “BUDGETING 101” Starter Kit.
Financial Goals
Budgets can be used to get out of debt, build an emergency fund, or just plain ‘ole “get your spending under control”. But whatever your end goal is, remember that budgets are fluid, they are not written in stone. So give yourself some grace and do your best.