What exactly is a budget?

Budget: both a noun and a verb…and a huge thorn in the side of many Americans.  Though it really doesn’t deserve it’s doom & gloom reputation.

It’s not a threat, it’s a safety net.

A budget, in the world of personal finance, is an estimation of income and expenses over a specified period of time.  It is a weekly or monthly instruction list that answers the question: “Should we grab a pizza tonight?”

A recent Gallup poll shows that more than 2/3 of Americans DO NOT BUDGET.  I would guess that the 1/3 of families who do budget have a hard time sticking to it.  Recent studies have shown that the average American family could not handle an unexpected $400 expense without going into debt.  Yikes. So what happens when a real financial emergency happens?  Nothing good.

People often look at a budget as a restrictive task-master that exists only to suck the fun and joy out of their spending lifestyle.  Try thinking of it differently: it is a tool of freedom.  It removes any doubts or questions like, “Am I saving enough this month?” or “Should we buy that new couch?”  As long as the budget speaks for each question, you are free from having to worry about that decision.

If you have a budget, all of those questions are answered in advance for you!

Phew. Cross that off the list.