What is Personal Finance Budgeting Anyway? Am I Failing?

     In my most recent blog entries I talked repeatedly about Expense Tracking. If you haven’t read them, I encourage you to go back to my blog and catch up.  Pretty exciting though, right?  Or is it?  Hmmmm….  I think I see some grass growing over there!

     As exciting as it is to talk about Expense Tracking, I’m going to need you to calm down a little now. We are about to get to the real point. My ultimate goal in discussing expense tracking was to lead you toward something else entirely.

BUDGETING!!!  

     What the heck is budgeting anyway?!!

     Is it an exact mathematical equation that gives you a perfect solution? Or just something that you write down, then ignore? Can you create a perfect one? Or is it just one of those things your parents told you to do that puts you in line and controls your freedom?

     I did some research while writing this entry and went to one of my favorite websites, Investopedia. I don’t really need to reinvent the wheel on this subject. So here is the Investopedia definition. They say, “A budget refers to an estimation of revenue and expenses that's made for a specified future period of time. Budgeting usually occurs on an ongoing basis, with individual budgets being re-evaluated regularly.”

     The key word that I would like to focus on here is ESTIMATE. Many people who have tried and, “failed” at budgeting have simply gotten the wrong impression. Chances are the “failure” they though they experienced wasn’t really failure at all! Why? Because budgets are NOT exact math equations at all… EVER!

     Is there only ONE right way to write a budget?

     Absolutely not. That tends to be the problem when people search the internet for a simple solution to their budgeting problems. Most of the budgeting templates you find are not personalized to fit your needs. How many bills do you pay in a month? Rent, electricity, insurance, natural gas, car payment…. How about that gym membership? How many different types of bills are there anyway? The simple fact is that there are so many different life choices available that one simple budget solution for everyone is just not possible. And we haven’t even considered your income structure.      With so many choices, isn’t it impossible to truly write an accurate budget? Well, the answer… sort of… is YES. Are you discouraged yet?

     I hope so…. I was trying very hard to recreate the discouragement that many people feel when dealing with their personal finances.

     NOW that I have, I hope, thoroughly discouraged you….  Let me explain why.

    No budget that you EVER write is EVER, EVER going to be perfectly accurate. There are way too many moving parts in life. So, why even bother with a budget? Isn’t it pretty much hopeless?

The good news is that all my doom and gloom does not mean that budgeting is a waste of time.  As it turns out, budgeting is a bit like trying to steer a boat through rough waters. No matter how hard you try, you will never steer it EXACTLY where you want because the current will always move you around. But, if you keep on steering, even though you don’t take the exact perfect path, eventually you WILL arrive in the right place. You just have to keep steering!

     A budget is a perpetual work in progress. And the only way you can entirely fail at it is by giving up.

So, the next time you work on your budget and get that feeling of FAILURE… Remember it isn’t you… it’s just the way budgets work!

Just a little after thought… Budgets do not put you in a cage or dampen your freedom. A well written budget can set you free!!

If you are struggling with your personal finances, please contact me. I would love to work for you!