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Do I Need a Budget?


Hey, it's Hal, and today we're going answer the question, does everyone need a budget? Now, I will go ahead and let the cat right out of the bag, but I definitely feel everyone does need a budget, and I will explain why. As I began my career, I was a budget and credit counselor, and I counseled thousands of individuals and families on establishing their very first budget.

30% of the time, clients would make a comment to me as we were doing their budget, saying they wished they had learned this in high school. That one factor alone led me to believe that everyone definitely needs a budget. As time went on, I always practiced what I preached. I always did a budget.

As my wife and I's careers grew, we made more money. We had more money in the bank. Things were relatively good. It became very easy to get laissez-faire with it and think, well, the bank balances look good, so everything is just fine.

At that time we were tracking things. We knew where our money was going, but we weren't really budgeting, we were simply inputting expenses and had a good look at the history of our money.

Since things looked good, and we felt comfortable, I kind of began to believe maybe everyone doesn't need a budget. The last five or 10 years of my life have really changed my feelings on the topic, and I firmly hold the belief that everyone needs a budget. In the short walkthrough, I'm going to explain why everyone needs a budget.

For simplicity's sake, we're going to look at everyone's spending on a continuum of whether you are a saver or whether you are a spender. We'll also talk about why, if you are only making a small income currently or have a lot of money in the bank that a budget will still serve you.

As we begin to look at the saver-spender continuum, let's talk about the dollars themselves first. Do you know that every dollar is a savings dollar and every dollar is also a spending dollar? Wait, what? It is true...every dollar is a savings dollar, and every dollar is a spending dollar. The fact is you save every dollar you make. It's just a matter of when you spend it. So with that backdrop in mind, let's start with the saver-spender continuum, and we'll start by talking about spenders first.

If you're a natural spender, you just have more of a ease of letting go of money. You get value from spending money. You're looking to get that some sort of sense of fulfillment when money leaves your hands, whether it's giving money away and spending that way or whether it's buying new clothes or new cars spending brings you joy.

The thing a spender has to remember though, is that there is some future version of themselves, and so savings is still very important for a spender. It's just a matter of really realizing what that is. Oftentimes a spender can get on what we call a hedonic treadmill where you make money, you spend money, you make money, you spend money, and that treadmill just keeps going faster and faster and faster until eventually you fall off.

A spender has to remember that they can buy anything. They just can't buy everything. I also like to think if we looked at these things medically, we might say that the spending mentality can become a cancer. If left unchecked it can grow out of control. So it's just something the spender wants to look out for and a budget can help the spender in that regard.

Now, the saver side of the equation is often misunderstood. I know this from personal experience as more of a saver myself, that a budget can be very, very helpful for a saver.

You see, for a saver money in the bank brings a sense of security. They often have a fear of running out of money, but a budget actually frees them up to spend money. It actually gives them freedom they need.

If we look at things medically on the saver side, I mentioned the cancer for spenders, but it's more of an atrophied muscle for a saver. Spending is a muscle that has to get used to be to become stronger, and for a saver, the budget helps strengthen it.

They can spend comfortably knowing that every dollar in their bank account has been spoken for and is in agreement with their purpose and goals.

So how do we heal the cancer or strengthen the atrophied muscle? The answer for spenders and savers is the term frugality. In today's world, we often think of frugality. We may think of being cheap. But really when you look at the Latin root of the word frugal, it means fruit and value. So the fruit we bear is aligned with what we truly value. Frugality is how we balance out the spender and the saver.

When you're being frugal, you are truly budgeting. When you're truly budgeting, you're looking at every new dollar that comes in and making a value decision on what you want that money to do for you. You're making a conscious decision weighed against everything that's going on in your life at that moment.

So when you're not budgeting by forecasting and you're actually actively making those decisions and being frugal, whether you are a spender or whether you are a saver, that is how we bring healing to it.

Now, I also mentioned earlier that we would talk about those who had a lot of money in the bank. Oftentimes we think, well, if you've made a lot of money or you have a lot of money in savings, or you're even financially independent, you don't need a budget. Again, I think the answer is you do need a budget.

It doesn't matter whether you have $500 in the bank or $5 million in the bank, you still need those dollars to align to your values. Your money needs to align to what is going to fulfill you in life and fulfill those around you. The budget helps you be a better steward of the resources with which you have been entrusted. That is what the budget does. It simply compares the money in your life to your needs, goals, and dreams.

So are you ready to get to work? Are you ready to create your life alignment plan? I hope that you're ready to start and that I can be a help to you if you want to know how to actively budget and not just track things. I've helped many people establish a budget and gain new, healthy habits with their money. I want to see you gain a sense of purpose and value in how you spend your money...and how you save your money.