Think you can’t live on a budget? Think again! Check out these 3 reasons why you can’t afford NOT to live on a budget!
I’ll never forget the day my husband walked out on a financial planning class.
The class materials had listed a sample yearly budget as $50,000 for a family of four. I cradled my belly as the kicks from the newest member of our family reminded me that our family of four was about to become five, and our annual income was a net of less than $20,000.
“How can we be expected to live on a budget if we make less than half of what the sample budget lists?” my husband asked in frustration. “No wonder we can’t make ends meet!”
But in that crisis moment, the tide began to turn for us–ever so slowly at first, but four years later, we are thriving, and it all started with coming to grips with a realistic budget to support our family.
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Once we knew what our family needed to live on, we were able to make a plan to reach that goal. We started our business, and although getting to the place where we have true breathing room was not easy, it has become our reality.
It all started with making a budget.
If you need help making a budget, I have good news! The You Need A Budget (YNAB) app is offering 34 days free! Claim this freebie here.
While some people may see a budget as constraining, I now look at is as freeing. In fact, I believe there is no better way to gain financial freedom than by living by a budget.
There are many reasons why you can’t afford not to live on a budget, but today I’m listing three.
3 Reasons Why You Can’t Afford NOT to Have a Budget
1. It helps you meet financial goals.
It’s impossible to meet long-term financial goals for big expenses, like buying a house or a car or funding an education, when you’re living paycheck-to-paycheck.
The only way not to live paycheck-to-paycheck is to have a proper budget in place.
When you know how much you need to save for a down payment for a house, for example, you can break that payment up until smaller chunks and allot the amount you need to save each month to reach that goal by a set time.
2. It helps you know how you are spending your money.
Have you ever started the month with a full paycheck and gotten to the end of the month and wondered: “Where in the world did all the money go?”
I’ve been there! When we first got married, my husband and I struggled without a budget.
He was the spender, and I was the saver. It drove me bonkers to not know where all our money had gone each month because we weren’t keeping up with it via a budget!
It’s impossible to know if you are spending too much on food, clothing, or entertainment if you aren’t keeping track of what you are spending and where.
3. It helps bring freedom.
I love how You Need a Budget put it: “Budgeting isn’t restriction.”
I couldn’t agree more!
Living by a budget is about how to do more of the things that matter most and having total control of your money.
If I need a new pair of jeans and know I have $100 in my clothing budget, I feel the freedom to go out and buy a $20 pair of jeans! On the contrary, if I need a new pair of $20 jeans but have no idea if I have money in the budget for them or not, I feel conflicted and even guilty for the purchase.
Living on a budget gives you the freedom to save for big financial goals, but it also gives you the freedom to spend the money you’ve allotted when a need (or even a want!) arises.
How To Keep Track of Your Budget
If you don’t know where to start with keeping a budget, the good news is that there are a plethora of resources available today. Three ways that seem most common include a handwritten budget, a computer spreadsheet, and, growing in popularity, online budgeting apps that work with computers and smart phones.
Here is how these three work:
1. Handwritten Budget
This is probably the way in which our grandparents kept their budgets. Don’t laugh, but my husband and I started out this way!
I am a kinesthetic learner, so the actual process of writing down the budget helped me to remember it.
There are some hangups with this type of budget keeping, however.
It’s not easily revisable.
I advise that you write out the budget in pencil, but, even so, you will probably have to start the entire budget over each month. Also, this budget is not accessible to you unless you have it with you.
This type of budget keeping is also the easiest to lose–at least if you are prone to lose things, like I am!
2. Electronic Spreadsheet
Most computers come with spreadsheet programs like Excel or Numbers. Keeping your budget on an electronic spreadsheet means it is easily revisable, and you are less likely to lose it.
If you use an online spreadsheet through something like Google Drive, you will also be able to access it no matter where you travel–with or without your personal computer.
My biggest hangup with this type of budget keeping is that others might be able to stumble upon it it, and it requires the user (you or your husband!) to input all of the numbers and do the math calculations–or at least set them up with the spreadsheet formula.
(I’ll be honest: I learned how to do spreadsheet formulas in high school computer class, but nearly 20 years later, I have absolutely no idea how to do it!)
3. Online App
My husband is the one who keeps our budget now, and this is the method he prefers. I love it, too, because we are both easily able to access our budget this way–no matter where we are!
An online app should allow you to log in and keep up with your budget via your computer or smart phone.
We recently discovered the app You Need Budget (YNAB for short).
YNAB has been featured on CNN and Lifehacker, and it really simplifies and takes the “fear” out of budget planning.
YNAB teaches Four Rules to help you stop living paycheck to paycheck, get out of debt, and save more money faster. You can check out how it works, and learn more about their “4 Steps” here.
I wanted to mention that rule 2–embrace your true expenses–especially spoke to me.
As I mentioned at the beginning of this post, my husband and I did not have a realistic picture of our true expenses when we were living on a low income. Living on a budget and “embracing our true expenses” helps us get out of the place of living paycheck-to-paycheck and go from surviving to thriving financially.
Not only does YNAB help you keep up with your budget, but they also offer live classes online as well as guides on how to prioritize your money, set goals, and co-budget with your spouse.
They are currently offering a 34-day free trial, which I signed up for. You can sign up for it here to see if YNAB is a good fit for you and your family.
FREE YNAB TRIAL
If you’re ready to start living on a budget, you can get a FREE 34-day trial to You Need a Budget! Simply click here and sign up for your free YNAB app today!
Do you live on a budget? What are your best budgeting tips?