One of the best ways to save money is something many people don’t do.
It’s actually sitting down and making a household budget.
A budget is a plan describing how your household will spend its money. As has been said in other contexts, a plan survives only until its first encounter with reality. This means that your actual income and spending will never exactly match your plan - some months you will spend more in some categories, some months less. For many people involved in work with busy and slower seasons, or who rely on the “gig” economy, income is going to vary month to month as well.
Even so, making this kind of plan is an essential tool for your financial health. Looking at how you’re spending money can yield information on where you are overspending and allow you to address these issues. It can serve as a reminder to watch where you are spending in certain areas, curbing expenses and making you think twice (or more!) before making that purchase. budgeting and tracking expenses may even reveal that you have more available funds than you thought, or allow you to figure out how to save for that down payment on that home or car you really want.
Look, scientists don’t do anything without data. Business don’t make a move without researching every aspect of the market and their operations. They need that data to make the most profit. Your budget, and looking at whether you kept to it, is your essential data, allowing you to make smart decisions and ultimately get the most for your buck.
So why don’t so many people actually sit down and do this?
Well, for one thing, it is time consuming. It takes significant time to sit down and categorize all your income and expenses. And then, for the data to do you any good, you have to analyze the data. More time. And the one thing most people tell me they don’t have enough of is time.
Another thing - for many people, it’s not fun. Many people are not “numbers” people. It feels like a math test, and lots of people would rather have a root canal than take one of those. For others, it’s just tedious and frustrating to try to figure out what this receipt was for, or what this line on your credit card statement represents.
But, I think there is a deeper barrier in doing a budget. This can be an emotional process. That may seem odd to say, but lots of people don’t want to face the truth about how they are spending money. Some feel shame for not keeping expenses in control, or don’t want to face the reality that, maybe, for example, they need to cook more rather than get expensive take out as much. Facing truths with your partner or others in your family can be difficult. Looking at spending can be a surprisingly emotional process, but it is important to go into the process putting aside the blame and shame and focusing on making everything better. This is a place where what you don’t know can and will hurt you.
This is where I as a Daily Money Manager can help. As a DMM, I can do this difficult process with you, getting accurate data over time and figuring out with you how to make ends meet and achieve many of your goals. Part of the way to deal with the difficult emotional aspect of budgeting is having a caring, kind and honest professional to listen with a sympathetic ear and strive with you to find ways to make your daily finances work on every level. I won’t promise that the process will be easy – it can be frightening to face the many emotional challenges making and adhering to a budget can bring. But I can promise that it is much easier to meet these challenges with another person and not alone. I think you’ll find doing this will be well worth your time and effort, over time easing the emotional strain managing your daily finances can bring.