How does the word “budget” make you feel?
What is your attitude toward money in general, and budgets in particular? Do you feel fear or frustration? Fear that your money will run out, or frustrated that you don’t have enough or don’t know where it all goes? The goods news is that you can turn both fear and frustration, or any other negative feelings, into freedom. Just by using a simple budget.
It’s counterintuitive because budgets bring structure and can feel restricting, but that sense of inhibition or loss of control mostly comes from budgets that other people impose on you. In contrast, when you’re making a budget for yourself, it’s freeing because you’re making the choices about what’s most important to you. Budgets, and more broadly the discipline of financial planning, allow you to express your values by where you put your pennies.
If you don’t make these choices for yourself ahead of time, then someone else will—your friends, your circumstances, your creditors, even your worst emotions such as pain, hunger, boredom, fatigue and despair. Instead, making your choices far in advance when you’re clear-headed, have the time to think through consequences, and putting these choices into a sustainable system will make all the difference to how you feel about the dreaded “B” word.
“Budget” is not a synonym for “denial”
Budgets have gotten a bad reputation, and let’s deal with that right now. Here are some of the words that get mentioned when I ask people about their personal finances and budgeting:
- Denial: budgets always say no when I want to spend money
- Restriction: A budget keeps me on a strict plan no matter what
- Judgment and shame: I feel poor or sad when other people find out I’m on a budget, like I did something wrong or am somehow being punished
- Guilt: If I don’t set up a budget or set it up but don’t follow it, I’m “bad with money” and I feel like a failure
I think all of these negative associations are perfectly valid for your past experience, but they don’t need to define your future. Budgets may have been used for all of these things in the past when people have forced their money views on you. Let’s change that perception and put you back in charge of your own finances. You don’t have to have any of these negative outcomes when you’re in control of your own budget!
How budgeting creates freedom
What if, instead of all these negative terms, we flipped the script and realized that budgets can give you choices instead of denial, freedom instead of restriction, pride instead of shame, and joy instead of guilt? Read below to find out how!
Budgets are a map
You wouldn’t say that wandering around lost in the countryside is a good thing. It would be scary, frustrating, and dangerous. The same applies to your money! You need a budget to provide visibility into where you are, and a plan for how to get where you want to go, just like the driving directions on Google or Apple Maps. This visibility provides you freedom from fear because you’ll know exactly:
- How much you’re making
- How much you’re spending, and
- How much you’re saving for the future.
Budgets are permission to spend
After you’ve gotten visibility in to where you are and where you want to go, you’ll be able to make stops along the way that are important to you. You’ve budgeted for that vacation, or new phone, or tickets to see your favorite singer. The money is there, so you don’t have to be afraid to spend it ahead of time, or feel guilty afterwards. There’s no guilt, shame, or worry; you’ve budgeted for it!
Budgets let you live out your values
Without the visibility and the structure that budgets provide, you won’t be able to actually accomplish what’s important to you. Do you love travel? What about saving for the future? Do you have a heart for giving to the poor? Maybe it’s providing a better life and opportunities for your kids, or taking care of your aging parents. Whatever’s important to you, budgets give you the freedom to actually achieve those goals.
Here’s how: budgeting forces you to sit down and take a real look at what you truly care about, letting you allocate your money to the stuff that matters to you. If you want to travel to Europe, you’ll need to save each month. But if you ignore your spending plan and blow that money on clothes you’ll wear once, tech gadgets you don’t need, or making car payments on a status symbol luxury SUV, the trip to Europe will always be “next year,” every year until you’re dead. I don’t know about you, but I haven’t seen many coffins touring the cafes in Paris or the castles in Scotland. If you fritter away your paycheck on the stuff you don’t really care about, there won’t be any left for the people and experiences you actually do love.
Budgets keep you from getting trapped by your worst habits or emotions
The thing I appreciate most about budgets is that it forces me to make decisions when I’m rational. If I decide how much to spend when I’m in the heat of the moment, thinking with my stomach, ego, or FOMO, then I’ll probably regret that decision when I realize what I could have had. Your habits and emotions and fears don’t care about what they replace—the 20 lattes that crowded out the gift for your mom—they just want to be satisfied, right now!
In contrast, when you make a rational plan that’s based on clearly seeing what you have and the tradeoffs you have to make, your fears and failures won’t be able to stop you from achieving whatever monetary goals are truly important to you.
Budgets free you from the destruction of debt
Back to our navigation analogy, when you’re lost without a map, it takes a toll. You certainly waste effort when you’re wandering around and can’t make progress toward your goal. But what about actual injuries or harm? The cliffs you fall over, the thorns you get scratched by, the poison fruit you encounter (thank you Hunger Games for telling a whole generation about the dangers of “nightlock” berries). You’ve destroyed a lot of your health and energy by not having, or not following, the map toward your goals.
For money, the four-letter word that means destruction is called “debt.” Debt devours your ability to be creative, debt hinders your ability find the true purpose for your life, debt makes it difficult or impossible keep healthy relationships. Budgets give freedom, but debt takes that freedom away. There’s a passage in the Bible that says “the borrower is the slave to the lender,” and I couldn’t agree more. Debt is the modern equivalent to slavery, regulated by the government and disclosed in those long terms & conditions documents you didn’t read. This is probably the biggest gift a budget can ever give you to you: freedom from debt and all the trouble it brings.
Where to go from here?
If I’ve been at all convincing that a budget can actually help you find financial freedom, check out these resources:
- The 4P Budget, which is our flagship budgeting system to both simplify and improve on other budget methods out there
- Next, learn How to Actually Stick to a Budget using these simple and effective tips