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?
This is a great post with great advice. I am putting my family on a budget because the “fly by the seat of our pants” financial plan wasn’t working for us.
It wasn’t working for us either!
A budget has always been such a struggle for me! Through the first 10 years of our marriage I pretty much ignored the whole concept. For quite a few years we were in the same place of making less than we needed to live. In the past few years I am learning to really embrace having a budget in place. For so long it just seemed restricting and frustrating, but you are right, it really does bring freedom! I wish I would have figured that out long before I did!
We felt the same way for so long! I’m glad we are both seeing freedom in it now!
I volunteer with a small non-profit that helps single mothers and their children. I teach the moms how to budget (we call it “financial planning” because of the stigma attached to the word “budget”) and inevitably the first thing they tell me is that they can’t budget because they don’t have enough money. The truth is that the less money you have coming in, the more you need to budget. I know it is scary to acknowledge how little money is coming in and how many bills have to be paid, but until you do, it is impossible to change your situation. I use YNAB, both personally and in my volunteer work, and it is so empowering to know exactly where you stand so you can figure out what you can do to change that. I literally sleep better at night because I know I have a plan in place. I spent many years living from paycheck to paycheck and constantly getting caught off guard when some unexpected expense came up. No matter how much money I made, I could never seem to get ahead. I wish I had found YNAB years ago! I am sharing your offer for the 3-month trial with several of my family and friends.
Thanks so much for sharing, Mary! I know how those mamas feel. 🙁 That is the place we were when my husband walked out on the class. It was so frustrating, but I am so glad we learned that a budget could give us freedom!
I really should work on this. We make enough money that I don’t have to watch every penny, but I know there are places I could be saving money to use for other things. Thanks for the inspiration. 🙂
We are there now, but I have seen how not watching the budget makes us spend more frivolously than when we were living paycheck-to-paycheck. I am so glad you found it inspirational!
Hi Erin! So this morning my husband and I decided to take the plunge and sign up for the 34 day free trial of YNAB. We’ve been working on it today…and then tonight I just read your e-mail about the 3 month free trial! It won’t let me sign up through the link you provided because we already created our account. I so wish I’d read through all my e-mail yesterday!
Oh no, Megan!! I am going to email my contact and see if I can get them to override your free trial or something. I am going to email you so you have my email address too. I hope they will work it out!!
I completely agree that a budget brings freedom! One of the best moves we made concerning our finances was going to a cash-only grocery budget. I am able to better plan and stay within our means. I also realize when it’s a time to stock-up or even splurge.
I love the cash-only budget concept for groceries!
Alison @ Tickling the Wheat
I totally agree that budgeting doesn’t have to be restrictive. It’s all about making your money (however much or little) work for YOU. The best part about budgets is the planning. I love setting a goal and figuring out how to achieve it. It’s also fun to challenge yourself to spend less than last month/last year in certain categories (I’m a budget nerd, so I do think budgeting is fun).
That does sound fun to challenge yourself to spend less from one month to the next.
This is so true, developing a budget was the key for us to finally get spending under control. I know that once I started paying attention to what I was spending, I was finally able to start saving.
I’m so glad it worked for you all too!
Sarah @The Teacher's Wife
I’m an Excel girl now, but am getting the itch to change things up. I am totally with you – on our single income teacher’s salary, a budget is a MUST for us to pay our bills and not accrue debt. I’ve heard good things about YNAB, but wasn’t sure I was willing to spend the money. I may have to check it out with the free trial! Thanks for passing that along! 🙂
Hope you enjoyed the trial!
I’m with you on this! You really can’t afford to skip a budget. We started one from the beginning of our marriage and even find that we enjoy working on it together!
I love budgets and a plan gives freedome and not restriction!
That is so great that you started one at the beginning of your marriage! What a great way to start!
If people are living on a budget, why are you charging them to help them gain financial freedom?
I’m not charging them. 🙂 Some of these resources are free, and my husband and I have found that an app helps keep us accountable. Everyone needs to live on a budget–regardless of income.
I know how to make a budget. How do I KEEP it?? I’m not very self-disciplined. (The humbled homemaker, pls feel free to email me!)
Hi Sabrina! I’m so sorry I missed this comment until now! I am not naturally self-disciplined either. I made “discipline” my word of the year–it’s something I am focusing on all year long, and I hope to improve in discipline in many areas.
For me, it takes looking over things each month to make sure we are sticking to things.
Kathryn @ Making Your Money Matter
I absolutely love YNAB and I love having a budget. It decreases stress so much to know that I have enough money set aside to cover all my bills and then be able to track them and know where everything went at the end of the month.
The keys to sticking to your budget (in my opinion) are first having really clear financial goals that motivate you and setting aside time every single week to track your expenses and compare them to your budget. YNAB makes it so easy and less time confusing and for me, that’s totally worth the money.
Thanks for sharing your YNAB experience, Kathryn!
Stephanie @ Six Figures Under
We have been loving YNAB over two years. It has worked wonders for our budget and has helped us pay off loads of debt!
Awesome! Thanks for the testimonial, Stephanie!