I have the privilege of talking to many people looking to change their financial situation. As you can imagine, no two situations are the same, though the concerns communicated to me are largely common. “Am I saving enough for retirement?” “How do I get out of debt?” “How much house can I afford?” And one of the most frequently asked questions, “can you help me with a budget?”
Budgeting, for whatever reason, is viewed as a four letter word in our personal lives. Businesses view an accurate and realistic budget as crucial to their success. Hirng a small business CFO can help with that. Families, however, typically see them as unreasonable, unworkable, and impossible to use effectively.
I don’t know why this is.
With that out of the way, I realize that what I’m about to share with you may not make you change your mind on budgeting. However, if you’ve been reluctant to give budgeting a shot (again), maybe this will open the door to that option even if it’s just a crack.
Here it is.
The perfect budget doesn’t exist.
That’s right. It’s virtually impossible to have your financial life mirror your monthly/quarterly budget down to the penny. Does it happen? I’m sure it does for very, very few people… occasionally. But that’s not the point. They’re the exception, not the rule.
A good budget will give you guidelines on what you can expect to spend in various categories each month. If you spend a little more in one area it can help you make sure you spend a little less in another. The whole point is to simply make sure you’re not out spending your income. If you keep this in mind, budgeting is much less stressful.
A good, sustainable budget is flexible. Don’t get too tied up about overspending in a category as long as you’re able to make adjustments elsewhere. The focus should be kept on making sure expenses are lower than your income for as many months as possible, not that each category was on or under budget each month. Give yourself a break. Life happens and spending needs vary from month to month. Keep your eye on the macro (overall income/expenses) and less on the micro (individual categories). If you can do this, you may find that budgeting isn’t as evil as you once thought.
