Lending Club Blog

Budgeting doesn’t mean buying nothing

Ever mention the word ‘budget’ to people who don’t have one? Try it. Their faces contort in this weird mix between disgust and teenage angst. “A budget? I don’t need one—I want to spend the money I earn, not leave it until I’m old and can’t enjoy it.” That’s what the eloquent ones say. Most say something closer to ‘Go away.’

But these people just don’t get it. Budgeting is not about getting rid of fun. It’s not about saving all your money. What is it about? It’s about setting priorities. By creating a budget, you know exactly how much money you need to spend on living expenses and how much money you have available to spend on fun expenses. With a budget, you can go out to make a purchase without worrying that you don’t have the cash to pay for it.

I know of a couple people who make similar amounts of money and spend the same amount every month. One of them always feels guilty when she buys clothes or shoes, because she doesn’t know if she can afford it. My other friend has no problem buying a new iPod or computer, because he just grabs the money out of his technology envelope. At the beginning of every month, he redoes his budget to make sure he is set for the upcoming month and simply refills his envelopes. No guilt, no problems, but he’s still buying stuff he likes.

When you create your budget, one requirement is that you allow for unnecessary expenses. If your entire budget is for things that you should do but nothing that you want, you’ll never stick to your budget. Once you follow a budget that allows for things that you want to buy, you’ll find it’s easier to follow a budget than not. Getting rid of the guilty feeling makes the 10 minutes it takes to update a budget worth their weight in gold. Or shoes.

Wednesday, August 15th, 2007 at 12:17 pm

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