Do You Really Need a Budget?
According to a 2016 U.S. Bank study, only 41% of Americans use a budget. This is an issue. Budgeting is the first and most important tool for taking control of your money, reaching your goals, and living out your values. If you want to travel somewhere you’ve never been to, you need some sort of map or GPS. Similarly, a budget shows you the path you’re following, and how close or far you are from where you want to be.
So why do most Americans not use a budget? It could be because they don’t know how. But I think it is more likely due to fear; fear of facing their financial situation; fear of what they believe will restrict their life.
Budgeting is the first and most important tool for taking control of your money, reaching your goals, and living out your values.
The fear of facing our financial situation is very real, but a budget isn’t where the fear originates - it’s already there. If you are fearful of budgeting because you have to face a tough reality, isn’t it worth facing the fear head on to eliminate it? Eliminating fear means you no longer have to deal with the constant stress of pretending it doesn’t exist. A budget, along with a solid support structure, is how you begin to take control.
Before I ever used a budget, I just had a lump sum of money in my checking account and a bit in my savings account. I had no idea how much I needed and no amount ever made me feel secure. When I began budgeting I found freedom in knowing I could pay all my utilities, go out to eat with some friends a few times, save for vacation, and still put money in a retirement account. I had a five-year car loan for around $10,000 before I ever budgeted. As soon as I started a budget I found I could pay way more than the minimum payment, which helped me to pay it off in a little over a year. In doing so I saved money on the interest and gain freedom from that debt. YOU create YOUR budget, so it isn’t restricting, it’s freeing.
Sitting down and creating a monthly budget can seem a bit daunting, BUT IT IS NECESSARY AND WORTH IT. I understand the feeling of not knowing where to even begin. At 221B Financial, we’re here to help you get started down the path toward financial freedom. We would love to help start that journey with you today!