So, if you're not on a budget, I'm not trying to call you a dummy. I'm just trying to imply here it's much much smarter to have one.
Many people have the completely wrong idea as to what a budget is. Let's look at the definition: "an estimate, often itemized, of expected income and expenses in a given period of time." (Dictionary.com) That's all a budget is. It's literally a list of what you make and what you spend.
There is a hand-cuff connotation that comes with budgeting. Many people hear "budget" and think "Oh man, I have to give up all my fun!" That's ridiculous. Nothing in that definition says that. But people who don't live on a budget see it that way, because they see it as something that will limit their abilities to spend money how they want.
On the contrary, a budget gives you POWER over your money. John Maxwell says "a budget is telling your money where to go instead of wondering where it went." By deciding in advance what your money will be doing, you completely control it. It's your money, after all, if you don't control it, it will control you.
We teach that there are four major types of budgets:
The Spray and Pray: You spend all your money and hope to God that it all works out.
The Hermit Method: Spend nothing and shove it all in a mason jar you bury in the back yard.
The Government Approach: You actually make a very pretty budget, agree on it, and spend it all...then keep spending...and spending...and spending.
The Effective Budget: You control every dollar you make by putting it down on paper before you actually spend it. This is a type of zero-based budget, where every month your income minus your expenses equal ZERO.
"But Heath, if we spend everything so that it equals zero, we won't have any money left for fun!"
You aren't listening and you have a misunderstanding of the word "spend." When you know you make $X per month, you decide at the beginning of the month how much you're going to give, how much you're going to save, how much you're going to eat, how much goes into the gas tank, etc. All of those are in the category of "spending." You spend money when you put it into the offering plate at your church or send a check to that charity or give some to your neighbor. You spend money when you put it into a savings account, when you invest it (hopefully wisely), and when you put it aside for future purchases. That's what I'm talking about. YOU decide how much money goes into each category of your budget. As long as you put every dollar you make somewhere intentionally, your budget will zero out and you have complete control over every dollar you make.
If you want to have $200 for food this month and eat really cheap food only, that's your decision. If you want to spend $1000 this month on food, that's your decision. Budget doesn't automatically mean that you drop all your expenses to the lowest possible amount. Just because some people mean that when they say "living on a budget" doesn't make it true. It's just a list of your incomes and expenses. We really need to take the word back and help people see that the context is NOT negative but positive.
Now, if you KNOW that you need to save more money and you KNOW that you need to pay off debts, with a budget you can see how much you're spending on certain areas (like entertainment, eating out, hobbies, etc.) and be intentional about lowering some of those areas to increase your savings or debt payments. This is part of the control you get from a budget. You make the decision, not someone else.
Once you've got the budget written out, you have to LIVE ON IT. You can't just make it and throw it to the side like it's just a theory. If you live on what you say you're going to live on, you succeed and learn discipline. I promise you 100% that if you do this you will begin to see results. Tons of people including my wife and I say the same thing when they finally make a budget and live on it: "It's like we got a raise!"
It's like a raise because you stop losing track of your expenses and gain complete control. It's not rocket science, people. Just Common Cents.
-Heath
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