Is Budgeting Actually Worth Doing?

A budget is something I recommend for anyone looking to improve their finances.

But, at the same time, I don’t use one.

Does that make me a hypocrite? I don’t think so.

Here’s why.

Why Use A Budget?

There are many ways that you can go about improving your finances.

The three general problems people have are these:

• Earning — You want to make more money.

• Spending — You’re happy with your earnings but not happy with how much you keep.

• Investing — You’re happy with earnings & spending but you want to put your money to work.

A budget tackles the middle problem.

The main use is to identify what you’re spending your money on, and how you can increase your disposable income.

Simple, right?

It’s a great way for improving spending, and ensuring you become more disciplined to reach your goals.

Why I Don’t Have A Budget

The thing is, a budget for your finances is like having stabilisers for your bike.

There’s an inverse correlation between your discipline, and your need for a budget.

What I mean by this, is that some people (I’m including myself) don’t need a regular, written budget.

It’s all in my head.

I’m not trying to put down those who use a budget, because I’ve used them before and I know how much they can help.

But, there comes a point where you reach a level of discipline, where it becomes a waste of time.

You aren’t getting a big enough ROI on the time you use to create a budget, which you can use on other things.

So, a budget can become… a bit pointless.

Not always, but it can.

Should You Use A Budget?

The good thing about deciding to budget is that you can decide for yourself whether it’s necessary.

Here are some things to consider:

Your Goals

Your long term goal needs to come above everything. This is non-negotiable.

Say you want to save 20% of your income, so you can start investing for the long term.

Are you able to reach this figure if you don’t have a budget?

Is a budget necessary for you to hit that target?

Only you know.

If yes, it’ll be best for you to use one going forward.

Your Time

Budget’s take time, and it’s important to make sure that it portrays your current financial situation.

Will the time be better off spent elsewhere?

There’s always an opportunity cost.

It doesn’t take a huge amount of time to create a budget. For a lot of people, it’s one of the best investments (of your time) that you can make.

But like most things, this doesn’t apply to everyone.

Your Financial Discipline

Like I said, the more disciplined you are with money, the less you’ll need a budget.

A budget means setting rules for yourself.

Which classroom do you think has stricter rules?

• The top set, with smart, kind & well behaved students.

• The bottom set, with naughty and misbehaving students.

It’s going to be the bottom set, right?

They’re less trustworthy, and stricter rules are needed to implement discipline.

The top set have more lenient rules because they’re trusted to succeed on their own.

It’s the same with a budget.

Do you trust yourself to reach your goals without one?

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