Why should you have a budget?
Well for starters we need to with what a budget is.
A budget is simply a plan for your money. That’s it! It isn’t complicated at all.
Think about what else you have a plan for:
- The school you wanted to go to
- The house you wanted to live in (rent or buy)
- What car you wanted to drive
- What you’re going to eat for dinner
- The clothes your going to wear to work
- Your hairstyle
- etc. etc. etc.
We could go on and on about things, tasks, or choices that you have or had a plan for and your money is one of those that you should have a plan for. Your budget is a plan for your money. That’s it!
Why is a “Money Plan” Important
A budget allows you to prioritize your spending. It helps you to choose to spend your money on the stuff that you want to and not just whatever grabs your attention next. With a budget you empower yourself to say “I don’t want that 10 gallon bucket of mustard from Costco because I want to go out to dinner with friends next week.”
A budget makes sure that your money is available for the things you need or want when you need or want them.
By having a budget you’ve given yourself the power to take control of where your money goes. In the YNAB world you give your money a “job” and whether you use the YNAB philosophy or not, that control of where your money goes is a goal of every budget. A budget helps you spend money on what matters to you and not waste it on things that don’t.
What about all the stuff I can’t Budget for?
We’ve heard friends talk about how a budget is too restrictive because they don’t plan all their entertainment expenses out in advance or they forgot to budget for things. That’s perfectly fine and your budget should have flexibility. Just like your plans for your hairstyle or what you’re going to eat for dinner, your budget needs to be flexible. You’re not going to remember everything you need to spend money on and things are going to pop-up that you couldn’t have planned for.
We utilize a “Stuff we forgot to budget for” category in our budget that acts as a mini emergency fund for all those gotchas. It’s a couple hundred dollars that just sit there waiting for the little things in life that you forget to plan for. It also acts as a mini buffer for when you overspend in another category.
Overspending in categories is also completely normal and expected.
Here’s a screenshot from our YNAB budget that shows our “Stuff We Forgot to Budget For” category. We aim to keep $300 in there just for those unexpected expenses:
Just so we don’t confuse you, the dollar amounts listed are not monthly amounts. They are “buckets” of money that should be available to be spent if needed. We’re working on a How to Use YNAB post to explain how it works.
But Budgeting is Stressful!
If you find yourself making this excuse, ask yourself what is more stressful: budgeting or not knowing if you have enough money to pay the bills.
With a budget with prioritized spending you will KNOW that you will or won’t have enough money for something ahead of time. We don’t know about you but a lot of time stress comes from the unknown. If we know something “bad” is going to happen it’s less stressful than just anticipating whether something “bad” may or may not happen.
If you have a lot of debt hanging over your head than it might be really scary to think about it all but we promise that if you build a budget and a plan to get out of debt that you will feel better.