Some people are going broke to avoid living on a budget. They hate the thought of a budget so much that they will do practically anything to get out of it. The problems our state and federal governments have with budgets is well publicized and probably just a symptom of our cultural aversion toward budgets. The idea of creating a budget has caused many marital fights and probably even some divorces. When my wife initially suggested that we create a budget after she read one of Dave Ramsey’s books, I admit that I was less than enthusiastic. However, after living on a budget now for almost two years, I can honestly say that I like it. It has taught me a lot so, I thought I’d share some of what I’ve learned in the hopes that it will help you.
I learned that true wealth is possible.
Before we implemented our budget, I spent money on whatever I wanted. This seemed great, but I never got ahead. In fact, it put me behind because there were several months that I overspent. Since I didn’t keep track of my money, I never really knew I was spending more than I made. I just knew that at times there wasn’t enough money in the checking account to pay for something I needed to pay. This led to borrowing money on credit cards and eventually a home equity loan. Of course, when you borrow money, you pay interest. This means that I paid even more for the things that I couldn’t afford. It is impossible to get ahead when you live this way. It is a downward spiral that leads you away from true wealth.
Living on a budget has made me realize that it is possible to control my money and accumulate wealth. I now know that I can win with money. Using a budget gave me back control. It forced me to consciously choose how to spend my money. By facing the choices and eliminating waste, I found all kinds of money that has enabled me to pay off all my debt except for my mortgage it just 20 months. It has absolutely amazed me how much money I found this way. Initially, I couldn’t see how I was going to be able to come up with any extra money on a monthly basis to pay towards my debt. However, by using the budget, I was able to slowly but surely identify several hundred dollars. Still, I’m not sure where it all came from but I know without a doubt that only through the disciplined use of my budget was I able to find it. By being debt-free, I can now build an emergency fund and start consistently investing which is the path to true wealth. This intentional spending feels so much better than the way I used to do things.
I learned that a budget is an instrument of freedom.
I think most people resist a budget because they feel it is going to take something away from them. It is going to be too restrictive. They won’t be able to get and do the things they want when they want. They think that a budget will bring to light their frivolous spending habits which will expose the error of their ways. I know that these feelings were where some of my initial resistance came from. Changing spending habits can be frightening and just as hard as any other kind of change we face. However, like with most other change, our fear of it is usually blown out of proportion.
I found that living on a budget provided me the insight into my money that I needed in order to feel more freedom. Before, I was always nervous about my overspending. I was a slave to those to whom I owed money. I worked to pay my debts. However, now through my budget, I know exactly how much money I have to spend. I am always confident that I will be able to meet my obligations and I have created margin in my life financially. The margin I have created is the difference between what I make and what I spend. This margin is a result of eliminating certain things from my monthly spending of lower value so I can dedicate those funds to items of higher value. Initially, this margin was used to pay off my debt, but now that I’m debt-free, I can use it for whatever I want. This is true financial freedom.
I learned that simpler is often better.
When I was living without a budget, I bought all kinds of things that I didn’t need. Many of these things required upkeep. Not only was I a slave to my debt, but I became a slave to the things that I bought. The more I had, the more I had to take care of. This left little time to really enjoy life. It created additional financial stress as well because the maintenance usually cost money. For example, when I had a boat, I had to rent storage space. When I had a Seadoo, I had to get it winterized. The headaches and expenses never stopped.
By making some choices and getting rid of some things, I have greatly simplified my situation. This leaves me more time to truly enjoy what I have. My budget exposed exactly what some of my non-essential items were costing me. It helped me make better choices which has made me happier. Yes, for awhile I had to be a little more frugal than I prefer, but now it is paying off. The extra money I found in my budget is starting to accumulate and make interest for me instead of for the lenders. I still want to keep things simple because I want the things I spend my money on to serve me instead of the other way around.
I have learned that living on a budget is the only way to really live. It is my path to a wealthier, freer, and simpler life. It puts me in charge of my money which is the way it should be. I will never again let it out of my control. The reservations I had have been overcome by these powerful benefits. I am convinced that if more people lived this way they would find these truths for themselves as well.
Also, if you want to learn more about how to get started and work with a budget, you should check out these articles from some of my favorite sites: