As someone who's worked with over 700 individuals and families on their budgets, I've heard a lot of reasons as to why they hate budgeting -- and I imagine you share some of the same reasons.
In this lesson, I want to go over a few of those hate-filled messages and tell you why they're lies.
This lesson isn't going to be filled with my favorite parenting phrase "because I said so", but with detailed reasoning on why budgeting is important.
The first lie is, "I don't have a spending problem, so I don't need a budget."
Budgeting is about making sure your money is being properly utilized for your financial goals - even if you don't think have a spending problem, you'll benefit from determining where you money needs to go -- especially knowing that your income isn't infinite.
I'll also mention that what you THINK you spend is often very different than what you ACTUALLY spend.
I've had many clients tell me that they spend $500 per month on groceries only to find out that they actually spend $750 -- small discrepancies like that can severely alter your path to financial freedom -- we'll actually talk about this in more detail in the next section of the course.
The second lie I commonly hear is, "It'll take too much of my time."
I'll be totally up front with you by saying yes, this will take a commitment from you and will take time to implement the strategies.
But my question to you is, how can afford NOT to commit time to your finances?.
There are only a few things in your life that will be with you your entire lifetime and your finances are one of them -- if you don't care for them, things will only get more difficult.
If you're spending several hours a day stressing about money, but spending zero hours doing something about it -- you need to make a change - only you are the solution to your financial problems.
A third lie I hear is, "I'll never be able to spend money on fun stuff."
This is where many people's hate for budgeting comes from - they automatically assume that everything is going to be stripped from them and they'll become some kind of hermit that just sits around - and that's just not true.
I highly encourage all of my clients to budget for fun stuff.
It's OK to budget for entertainment, dining out, clothing, spending cash, etc. - but you just need to know what your limit is.
Will budgeting for such items slow down your debt repayment or savings plan? -- sure, but you'll be much more likely to continue with your budget if you include them and that will ensure your success.
A fourth lie I commonly hear is, "Things will be fine once I make more money."
While I don't hear this one too often, I actually think it's the most common.
We all like to hope that things will get better, and many times they will -- but when it comes to money, the evidence just isn't there that more of it makes things better.
In fact, studies have shown that once you make over a certain amount, the benefits of earning more just aren't there.
Now sure, you may be in a position where you're still not even close to that amount and could certainly benefit from an increased income, however, if you don't gain control of your money today, you'll probably just spend more as your income goes up.
I know many people that even after making more money, didn't really have much more to show for it -- their savings didn't increase, their debt didn't decrease, and their stress levels are still through the roof.
If you can work through a budget with what you currently make, you'll know exactly what to do with additional income in the future.
While I imagine there are still several lies out there, the last one I want to go over is, "I've done well so far and have no debt, so I don't see the need for a budget."
Whether you make $25,000 or $250,000 per year, you should have a budget -- you can overspend in either circumstance -- just ask all of those millionaires that have filed for bankruptcy.
It's great that you're debt free, but if your goal is to REMAIN debt free, you need to budget.
In fact, you may be just a small financial emergency away from being in debt again - budgeting can help remove that risk.
To recap, budgeting is a crucial part of a properly constructed financial plan - if you want to reach financial freedom, you're going to need one -- don't let the lies prevent you from achieving it.
In the next and final lesson of this section, we'll go over everything you've learned and what you can expect in the next section - see you there.