Budgeting: Is it Worth it?

You have undoubtedly heard that to be financially successful, you need to establish and maintain a budget.  Maybe you even have one in place already, which is good so long as you follow it.  Therein lies the problem.

As with almost every financial and investment plan, most of us fail to maintain that plan or even adapt that plan to life changes.  Budgeting is no exception to this fact, and even I fail to follow my own budget many times.  But does it mean that not following your budget will mean you cannot be successful?

The answer to that question is very dependent on you.  For me, not following my budget has not been a major problem, though it does keep me from meeting or exceeding my goals faster.  I am fortunate in that I make enough money to be able to live beyond my budget.  At times, though, I have had to implement my budget and stick to it to survive with minimal financial impact, penny-pinching if you will.

Many of you reading this are likely facing the latter situation, especially in this economy.  If you find that you are living paycheck to paycheck, budgeting and discipline to stick with that budget are imperative.  Failure to follow that budget may lead to financial ruin, so you better do it and be very strict about it.

If you do fall into that category, may I suggest you even go as far as setting up different envelopes for different expenses, financial accounts per se.  Have an envelope for food, entertainment, car expenses, utilities, etc.  Then place the budgeted amount in the envelope, using ONLY the money in that envelope to pay those expenses.  If you run out of money in the envelope, DO NOT “steal” from another envelope, rather stick with the budgeted amount.

This type of discipline can help you improve your cash flow, even get you to save where you never thought you could before.  It will also help you tremendously in figuring out where all of your money is going, leading to revelations on where you overspend.  I recommend this approach to anyone who finds themselves ever wondering just where their money goes, especially if you do not have a program to track it, at least in Quicken or Microsoft Money.

Some of you reading this may be like me in that you earn enough money you don’t have to worry about your cash flow.  If you have done a budget before and stuck to it in recent history, budgeting may not be worth your time.  However, like almost everything, you do need to practice it from time to time or you will not be very good at it when you do need it to survive some day.  Notice I said when and not if as I am a firm believing in being prepared for whatever life throws at you.

Getting back to the question at hand, is budgeting worth it, the answer is yes, at least to some degree.  Just how worth it will depend on you and your situation, but everyone needs to be at least proficient in utilizing a budget in order to maintain fiscal discipline and ensure financial success.