I did a survey asking people: how do you normally budget?
The options to answer were:
- In my head
- Pen and paper
- Using a spreadsheet
- On Monzo
70% of the answers were (1) in your head
Doing it in your head is great for an overview of a budget but if you have got big financial goals that you want to hit, then you are going to have to really get into some more detail than just doing it in your head.
So why is a budget so important?
We live in a world where we need money for things…
We need money to survive, money for food and rent or mortgages, to buy things, to get around. It is just how it is.
There are the necessities (food, water, shelter). Then there are the luxuries (clothes you want to buy, holidays you want to take). Everybody wants to be able to live a life where you can afford both.
But to be able to do that you need to know you are not living outside of your means.
You CAN have it all (if you budget properly)
A lot of the UK are in consumer debt, because they live outside of their means.
Partly it is not our fault, we are being marketed-to to buy products constantly. Billboards, radio ad’, adverts on our phone. It is always in your face.
We weren’t taught in school how to budget our money and it is easy to want to just spend it.
It is easy to ignore the fact that maybe you can’t afford it. You just thin “ah stuff it, ill put it on the credit card”. It is so easily done.
But it is really important to learn to live within your means.
If you set a budget, it means that you can pay for necessities, you can pay for luxuries and you can prepare for the future. (to save for a house, or prepare for a baby, or to go travelling).
A budget helps you understand your money.
I bet even millionaires have a budget.