Let’s be honest, when you operate your finances without a budget, you don’t really have anything holding you back from spending beyond your means. Sure, you might have a general idea about how much money you can spend each month, but without hard, accurate numbers, it’s easy to lose control of your spending habits. I would know. Before I started budgeting, we spent money like it wasn’t a big issue. From going out to eat, to taking trips to the mountains, without a budget it was hard to correlate our daily spending to our less than optimal financial situation. I mean, sure, buying one lunch out to eat at a time doesn’t feel like a big deal in the moment. However, when you sit down with a budget and add up the cost of 30 Chipotle burritos each month (yeah, I said 30), those seemingly insignificant lunch bills add up to way too much spending.
In other words, budgeting is important if you want to keep a close eye on your daily spending habits, understand the impact of seemingly small expenses, and take control of your spending. Along the same lines of controlling your spending, budgeting is important because it keeps you on track when you are trying to achieve your financial goals. Let’s be honest, setting goals is pretty easy. Anybody can do it. You just think of something you want to achieve, and then set a defined timeline to achieve it. But here’s the thing, setting goals and actually achieving your goals are two very different things. In order to achieve a goal, you need to stick to a plan, and stay focused on a clearly defined process; and that’s where having a budget is so important. Through a budget you can reverse engineer your goals, and develop a clearly defined process to achieve them. In essence, when you create a budget, you are setting boundaries on your financial behavior so that you can stay on track and achieve every goal you set for your life.