What a Budget Really Means

[ProfMoneyWise]

(Written by Chris Russell and posted on The Total Money Makeover/Dave Ramsey Site)

It's known as "the dreaded B word." That's right—the budget. People hate doing a budget because they think it restricts them. It's true that a budget is the boss of you, but only after you are the boss of it.

To make a budget, you need to turn off the television, sit down with your spouse, and write down your income for the month on one side of the page. On the other side, list every expense you have for the month. This includes food, utilities, rent, transportation, clothing, phone—everything that you are going to spend money on for the upcoming month. The income minus the outgo must equal zero. That's it; you've now made a budget.

Did you notice something? The budget only has what YOU put on it. This isn't some cruel dictator marching up to your front door with a piece of paper saying, "This is how you will live." This is you deciding what you are going to spend money on.

A budget is a battle plan, not a strait jacket. If you were going to find buried treasure, would you call the map a strait jacket? Of course not! The map shows you where to go, what to avoid, and how to do things so you don't waste your time. A budget is the exact same thing. Using one even produces the same result as a treasure map—you'll have riches at the end of it!

There are two reasons why people hate the idea of a budget. First, they feel like a budget is constantly looking over their shoulder like a hall monitor. That's not what it is, so don't think of it like that.

The second reason people don't like the budget is because they automatically assume that a budget equals no fun. That's not true. Budgets can include categories like eating out, movies, fun money and more. Unless a person is under an extreme debt load and needs to cut the lifestyle to beans and rice, they can budget for some fun stuff within reason. If he or she can't afford any fun, then they definitely need a budget!

A budget is telling the money what to do instead of wondering where it went. The sooner a person makes one and sticks to it, the sooner their situation starts getting better. It works every time!