Personal Finance

Do You Really Need a Budget?

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Personal finance is largely a matter of preference. You don’t need to use a budgeting strategy to manage your money any more than you need a car to get around your city. Some people see it as the easy mode of transportation, while others find the maintenance, insurance and fuel costs a hassle. Whatever you prefer, it’s only important that it works for you.

The Purpose of Budgeting

Not all budgets are the same. Some people allocate their money to very detailed expenses and obey them to the dollar, while others use budgets in a more general sense. It’s really just a plan: You decide where your money is going before you spend it, and the idea is to stick to it.

Budgets are tools people use to reach their goals and make sure they’re spending only what they can afford. You can do those things without pre-determining where you’ll spend your money, but the lack of structure in your finances could make it more challenging to know your progress and adjust any habits that may be detrimental to your financial endgame.

Drawbacks to Budgeting

No one thinks it’s fun to budget. (OK fine, I love budgeting, but I’m a bit nerdy like that, and even I find it frustrating at times.) Putting together a budget presents you with the reality that you may not be able to afford eating out as much as you’d like, or that your monthly clothes-shopping bill needs to go down drastically if you ever expect to retire.

At the same time, some people can get obsessive about their budgets, focusing too much on the plan and forgetting to adapt when necessary. Things like gas prices and electricity bills fluctuate constantly, so your budget needs some flexibility, too.

Setting aside money for the fun stuff is just as important as allocating for the so-called responsible things, because if you don’t permit yourself any fun, you’re more likely to get off track with an impulsive, feel-good purchase you may not need.

Prioritize Value

Financial responsibility doesn’t mean you have to be cheap. In a Reddit discussion thread covering this topic, one poster wrote, “Budgets just don’t sit right with me. I hate the idea of getting something that isn’t good enough just because I didn’t want to pay more.”

This is where the flexibility comes in. If you need to buy something ASAP, you may have to cut back on another adjustable expense to pay for it, if you think a higher-priced option will provide superior quality. Maybe you’ll just have to wait until the next month or two to buy whatever it is, so you can afford the item you really want.

A budget isn’t telling you what you can’t buy. One respondent to the one Redditor’s comment highlighted an important perspective: “You must stop thinking of it as a sacrifice.” Whether you’re categorizing all your planned spending or merely tracking cash flow, the important thing is to live within your means.

A few weeks ago, I overheard two women at the gym talking about spending. One was talking about how she likes using the online budgeting tool Mint, and the other responded: “I used to budget, but I don’t even want to know anymore.”

The other woman then pulled out her phone to show her friend the app and how it breaks down her spending. “That stresses me out,” the non-budgeting woman responded.

So maybe a detailed budget isn’t for everyone, but you don’t want to ignorantly fall into debt, either. No matter how you approach your personal finance, you at least have to make sure you can afford your choices and that you’ll be able to afford them in the future. The rest is really up to you.

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Image: Cathy Yeulet

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