To Budget or Not To Budget? What's the Verdict?
If you were a judge and your next case was, “People vs. Budgeting,” would you rule in favor of the People no matter how many valid arguments Budgeting presented? Maybe the case would open with the court reading a charge like: “The defendant, Budgeting, is charged with violating the overwhelmingly accepted principle of, ‘Buy now, pay later.’ The defendant, Budgeting, is also charged with living within his means.”
A recent Gallup poll revealed that two-thirds of Americans do not budget. So, as silly as this sounds, most people would vote against building a budget.
5 Arguments Against Budgeting
Why don’t people budget? Five common reasons we hear at GreenPath are:
- “It takes too much time.”
- "Budgeting is too restrictive.”
- “I pay my bills on time, so I don’t need a budget.”
- “I don’t know how.”
- "There is no money to budget.”
5 Arguments in Favor of Budgeting
Let’s be honest, budgeting isn’t easy or fun at first. However, it’s an important part of successfully managing your finances.
Let’s take a look at five arguments in favor of Budgeting:
- A budget helps you gain control of your finances. Think of a budget as a financial roadmap. It will guide you to your destination. It will also reduce arguments and improve relationships because you and your family will know where you are going financially, providing a smoother ride along the way.
- Budgeting helps you achieve goals. Whether it is putting money aside for emergencies, a vacation or a college education, a budget helps you devote resources to those things that you determine are most important. Having a plan also promotes well-being and reduces stress.
- A good budget keeps you honest. Documenting purchases allows you to identify the leaks in your budget because you weren’t keeping tabs on where the money was going. Do you spend a few dollars each day on coffee? Do you pull cash out of your wallet or purse without any thought? It’s so easy to take $50 out of the ATM and just spend it. By keeping a budget, each dollar you spend is accounted for. That’s a powerful incentive to stay honest.
- Budgeting helps improve habits. What you measure, you can improve. If you spend more than you earn, you will drain your savings. And, if it continues, you will take on debt. Are you $100 away from going underwater? $500? $1,000? By measuring, you will know for sure and take the steps necessary to improve your habits.
- Budgeting helps you avoid debt and improve credit. By truly understanding how much it costs to be you, you can make adjustments to stop living from paycheck to paycheck. You may be able to identify ways to get out of debt and stay out of debt. By paying your bills on time and not taking on too much debt, you will take the most important step toward building good credit.
So there you have it. Given these reasons, I wonder why the majority of us would rule against Budgeting. What’s your verdict?