Barbara Hause MBA

Synopsis: Creating a flexible helpful spending plan

Budgets seem so limiting and restrictive. What could possibly be fun about having a budget?  What would you be giving up…eating out, your motorcycle, your daily latte, vacations, clothes, or just “things”?  You may be thinking budgets are only for people who don’t earn much money.

Some say having a budget is too much like being on a diet– always craving and never being satisfied.  It means saying “no” to things you want.  Budgets make life boring – no more gadgets, luxury cars, spontaneous vacations.  You are not a number cruncher.  You feel you don’t have the discipline to stick to a budget.  

On the other hand, what if you are not at risk of losing your home to foreclosure?  What if you are expecting to inherit money someday?  What if you have a reliable source of income?   What if you just don’t have the time to budget? 

Unfortunately, the mortgage crisis took a lot of people by surprise.  Life is full of surprises that can catch you off guard:  a weakened economy, a job lay off, divorce, investment loss, a frozen pension, social security bites the dust or your parents live to be 110.    Living without a budget could be like living on top of the Hayward fault without earthquake insurance. 
 
Budgets are not only about planning for a financial crisis.  Budgets are about making you a prudent money manager.  When you become deeply involved and informed about exactly how much money is coming in and precisely how much money is being spent, you will become adept at making strong money choices.

Budget does not have to be a four letter word.  If it sounds better, call it a spending plan.  A spending plan is less restrictive than budget.  When you plan you are making choices.  Plans are flexible and can be adjusted.  Plans are about thinking ahead.  When you anticipate future expenses whether fixed or discretionary, it may be easier to resist an impulse purchase for a more gratifying purchase you have planned in the future.  

Evelyn used to spend money every month until it was gone.  By the end of the month she was desperate for her next paycheck.   She never had money to visit her family or take a vacation.  It wasn’t until Evelyn became faithful to planning and tracking her spending she became aware of her spending patterns.  When she started to think ahead she could make strong choices.  She was thrilled when she could pay cash to go to a family reunion.  She admitted keeping herself focused on attending the family reunion made it easier to walk away from spending money on “things”.
 
Do you think there may be sub-prime borrowers out there that wished they had a budget before they entered into financial commitments that backfired on them?   Do you think these borrowers wished they had the foresight to consider all aspects of the transaction before signing on the dotted line?   

It is ironical that hindsight may have some sub-prime borrowers wishing they had had a budget before making a poor choice on their mortgages.  Now the banks are forcing sub-prime borrowers to budget in order to keep their homes. 

What if budgets become in vogue? What would your life be like?  How much money could you save? What would it be like not to stress or fight about money?  What if you did not have to pay interest on consumer debt?  What if you weren’t burdened by things?  What if spending quality time with family and friends did not always mean spending money?  How creative could you be and how much more satisfying would your life be?