Emotional “Budget Busters”

To many people, “budgeting” holds nothing but negative connotations. They feel that budgeting is some sort of punishment, rather than an act of liberation.  Successful businesses think differently, in fact, they’re usually successful because they budget, knowing they make better decisions that way.  After all, if a business didn’t devote time and energy to budgeting, they’d be more likely to make poor choices, and too many of those can lead to disaster.  The same is true for us.  Even though we know we need a good financial plan, many of us are reluctant to take a serious look at our finances. These barriers put our future in jeopardy, preventing us from becoming financially liberated. Let’s take a quick look at some of these Emotional Budget Busters.

The first Emotional Budget Buster is Denial, and, as financial counselors, we hear it every day. “I don’t need a Spending Plan. I manage my finances just fine.” On the wall in my office is a drawing of a large circle, with a tiny dot in the upper right-hand section.  The circle represents Information. The dot, “More than you can ever dream of knowing.” Trust me; there is a lot to know about your finances, and if you think you’re doing ‘okay’, you probably sense that you could still do better. What are the current interest rates on all my loans? When is the right time to open a new credit account? When should I refinance my home? How much do I need to save for every year I’ll live in retirement? Most people can’t answer these questions, and those are the easy ones!

Our second Emotional Budget Buster is Apathy.  I remember trying to do a simple spending plan with a former roommate – a pretty lazy guy, and his response was predictable, “Ugh, I don’t want to make a budget right now.”  People put off a lot of things, but money management shouldn’t be one of them. An effective Spending Plan can make a huge difference in your life.  It helps identify waste and highlights expenses that can be adjusted.  Those adjustments build savings, and pretty soon, you’re on your way to reaching your short- and long-term goals.  Imagine a day when you no longer dread opening your bills. That day can be today, as long as you’re willing to take the time to plan.

One of the toughest budget busters to overcome is Defeatism.  I definitely struggled with this when I was younger.  Like many people, I thought “I don’t earn enough money to bother with all that.”  Well, I was wrong.  At the time I brought home about $150 a week, and my bills were around $210.  After a couple of weeks tracking my spending, I was able to adjust my budget in line with my income.  Even better, I took the little I had left over and used it to start building savings.  Even with the job I had at the time, I was able to meet all my obligations and set aside 8% for savings every week.  It doesn’t sound like a lot, and it wasn’t – I started saving just $12 a week, but $12 is better than zero dollars, and when I eventually ran into a little bit of financial trouble, the few hundred dollars in my savings account was a lifesaver.

Finally, we come to our last Emotional Budget Buster, Negativity.  Whenever I meet someone who’s struggling, I encourage them to budget. As you can imagine, the responses aren’t always pretty. A lot of people tell me that the whole thing sounds horrible, or that their friends tried it and hated it.  To be truthful, there is some work involved, but it’s not difficult and the payoff is amazing.  When you completely understand your finances, you gain the ability to make informed decisions, a profound accomplishment all by itself. Instead of being led by your wallet, you lead! Now, that’s positivity in motion, which brings us to our rather obvious conclusion: when it comes to making a Spending Plan, the most important factor isn’t how much money you earn or how much you owe; it’s your state of mind that matters most. Until next time, I’m Thomas Fox for Cambridge Credit Counseling.

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