Saturday, 17 December 2011

Are Budgets really sexy?

A whole host of people out there swear by Budgets. According to them, if you don't budget you cannot be financially successful. You cannot ever be in the black.

I would beg to differ. I don't mean to say that Budgeting is worthless. But I don't thing they are super essential. Here's why...

What does a budget really do for you? For one it tells you exactly how much to spend on what and when. They sort of force you to live within relatively rigid lanes. But life is anything but rigid. No 2 days are the same. So how can one expect to spend a preset amount on the same things month after month?

On the other hand, budgets don't really help you control your spending. That's the job of your will power. All budgets do is give you a guide on what your spending should be. What actually happens is that for most people, month after month, the lines get blurred, and we have trouble drawing in the lines so to speak. And there are always the surprises, the oh-I've-been-waiting-for-this-sale-forever-so-I-have-to-buy-this-now situations.

Perhaps there's a better idea. Keep an eye on your spending. And as long as you're under the ceiling, you're good. This will allow you the freedom to do what you want while still keeping your bank account in the black.

My parents never kept a budget as far as I know. And I grew up in a typical lower-to-mid-middle class family. So we never really had a lot of money to go around. So we were always careful about spending. But I don't remember any budgets. And I guess that habit has continued in me. I have never kept a budget. I do keep track of what I spend on what. But its always after the fact. I do keep a general idea of where I hope to land on the monthly expenses. And I have been this way all the time ... even when I didn't have much in the bank account.

Thankfully things have turned out OK and I have never had to go into debt (well except for the mortgage). So I guess the question is ... am I right? Are budgets really overrated?

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