Say the word “budget” and you’ll get a host of definitions from different people, depending on their financial situation.
To one, a budget means restriction. To another, budgeting is a way to stretch income. Still another sees money management as a way to build their retirement or college fund. Are any of these descriptions incorrect?
No, they are not. However, while one person’s circumstances may cause them to view only one of these aspects, a good budget actually has all three characteristics.
A good budget is meant to be somewhat restricting, to help us discipline ourselves against overspending. It’s not meant to corral us to a point of resentment. On the contrary, putting money to work within the confines of a budget can help to relieve financial stress.
A budget is usually designed to stretch income, to prompt us to make wise spending choices. It can help curb impulse spending and help us to get more out of every dollar. Knowing that we’re making smart purchase decisions can be very encouraging as we budget ourselves toward financial security.
A budget makes a way to store up money without guilt. Saving, whether for a big purchase or future retirement, is much easier when required by a budgeting plan. By setting aside a certain amount or percentage regularly, we can see savings grow, which is enormously satisfying.
You wouldn’t leave home without a map, directions, or GPS to go somewhere you’ve never been. Quite simply, a budget is a map. It serves to show where you are, where you want to go, and how to get there. Budgeting can get you on the financial road that you desire. It’s just a matter of following the directions.
Depending on the goal, it may restrict spending on some things, urge us to think calmly about purchases, and push us to save for that vacation or new car. When we get to the destination, when we reach our budgeting goals, we can look back at where we came from, and realize that it was well worth the effort.
Have a great day!