When people think about a personal budget, they usually have one of two thoughts:

Math Side of a Personal Budget

The first thought comes from the math side of money. It goes something like, “Budgets are so hard, you have to be financially sophisticated to use one.” In reality you don’t and they are even easier to create as I’ve got a free excel file which will create a custom budget for you.

Mental Side

The second thought comes from the mental side but is not usually a thought most people are conscious of. Without realizing it, a lot of people think a budget’s “job” is tell you what you can and can’t buy. It’s almost as if the budget is in control of your finances. 

You are in control of your finances, not your budget. Think of your budget as a “to-do” list. Here’s an example to illustrate. You come back to work after a two-week vacation and have hundreds of emails, each requiring some sort of action. Rather than feel overwhelmed you make a list of everything that needs to be done and begin working through each item. We are all familiar with this and recognize it as a way to stay organized and feel accomplished.

Your budget is just a financial “to-do” list. Each bill that needs to be paid every month is an item on the list. Items are marked off a conventional to-do list by using time to get them finished. With a financial to-do list (AKA budget) we use money to cross each item off, i.e. pay each one.

At this point you might be thinking, “Great I only have so much money, so this doesn’t help.” In reality you only have so much time, but you can always make more money. Remember, your thoughts determine your results. If we aren’t thinking about making more money or reducing expenses, we sit in the same place of suffering. You’re always thinking “I’ll never get out of debt” or whatever thought you currently have. 

The word “budget” carries a negative connotation so I like to refer to it as a financial to-do list.

Benefits of a Budget – Financial To-Do List

• Eliminates Stress – When bills arrive, they are anticipated, not a surprise. When you go grocery shopping you don’t have to worry about how you’ll pay for everything. The funds have already been set aside.
• Control – You know where your money is going. You make the decisions as to which bills get paid.
• Financial Progression – Your financial position will improve as you “stay on budget,” your bills are paid on time and your debt is reduced.