‘Budget’ is not a dirty word. There I said it! I have come to realise that for some people the term ‘budget’ can have a lot negative connotations. For some people the word budget is synonymous with frugal or cheapskate. It can suggest cutting back on your favourite things, doing without or being cheap. For some, it can conjure visions of rooting through the rubbish bins, giving crappy Christmas presents or only allowing 3 minute showers or whatever other horrors you might have seen on TLC’s “Extreme Cheapskates”.
For me having a budget is about valuing and respecting my money. I work hard for my money (as we all do), and so it’s important for me to optimise and maximise this valuable resource so as not to be wasteful. Money is by no means the most important thing in the world, it’s not even close, but it is an important tool.
By having a budget, I can tell my money where to go. It means I know how much all my bills are and when they are due, it means I can afford the kind of lifestyle I want and I can save and invest towards my future goals. Another way to think of a budget is to call it a spending plan or wealth building plan. It tells your money where to go so you can make sure you have covered all your expenses, savings and investment goals. My spending plan is closely aligned to my personal values and gives me permission to spend on things that are important to me, including items that might be considered “wants” and not needs. I wrote about 7 things I splurge on that are completely worth it to me here. I can spend on these things guilt free because it’s in my budget.