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Budgeting: The Best Thing No One is Doing


Just thinking about the act of budgeting is such a buzzkill that many financial planners try to re-brand it when the subject comes up. “Spending Plan” or “Financial Road Map” can sound much more palatable, and those are pretty good descriptors. We are, after all, putting together a plan for how to spend (and save) your income, and we are creating a map for you to use in handling your money.

People misunderstand the role of budgets. Be you high, middle, or low-income, a budget can give you freedom and peace of mind. Far from being the restrictive, fun-squelching practice most people assume it to be, the whole purpose of budgeting is to align your spending practices with your values – with the goals you most want to reach. In the process of figuring out how much you are spending where, we figure out where you want to be spending it and what you’d really like to be doing with your time and money. Maybe you want to travel more, go back to school, start a business, retire early, work part-time, pay down debt, or take some time off to do something extraordinary with your kids while they are still young. Maybe you’ve assumed these things aren’t possible because there is never any money left at the end of a paycheck. They very well could be possible. It’s all about putting your money there, instead of the many everyday things we spend money on when we don’t put our real goals first.

Another important truth about budgeting: You don’t have to start the process by spending time mired in your past spending habits and feeling guilty. In fact, in many cases, I encourage people not to spend time calculating past spending with exacting precision for things that are discretionary. What matters much more is how you are going to be using your resources going forward. Figuring out what fits in your budget going forward is much more productive. Then, figuring out how to be true to that new amount is just as important. Maybe you’ve been spending lots of money on dining out or on tech gadgets (or both!), but you know you could spend less if you were saving for a more meaningful goal. It doesn’t mean that you can’t spend money on dining out or gadgets anymore, but it does mean putting a number on the “right” amount, so that short-term impulses don’t derail your big goals.

I realize and accept the depths of my nerdiness when I say this, but budgeting could be one of the most impactful things you do for yourself or your family. It provides structure that works in the background as you go about your most important work in life, persuading you to make decisions that make your time and money work in the direction that you choose to take. See? That’s liberation.