personal budgeting freedom

Four Ways Personal Budgeting Gives You Freedom

In Budgeting Tips, General Budgeting by Phil McGilvrayLeave a Comment

I will often meet people who, despite being in a bad financial situation, are seriously resistant to the idea of budgeting. Their biggest concern is that a budget will constrain them, that they won’t be free to spend on the things they want to spend on. While in some sense this might be true, I would argue that there is no fun or satisfaction in spending money you don’t have, even if it is on ‘stuff’ you really want. In this blog I want to share with you four ways in which a good budget will give you freedom.

Freedom from guilt

We have all heard of buyer’s remorse; that sense of guilt that comes over us when we have bought something and know we can’t afford it or really don’t need it. Buyer’s remorse typically comes on immediately after a purchase and robs us of the enjoyment that we hoped we would derive from the purchase.

When our finances are a little out of control, it can be very hard to spend money on ourselves and really enjoy it. In the back of our minds there are nagging thoughts about the upcoming (or overdue) bills and expenses.

Guilt associated with spending on ourselves is all too common because when we are typically spending money, we are not sure if we can afford to spend. One of the key benefits of a good budget is that you can purposefully allocate funds for having fun while sticking to a budget, all while knowing that you have all your future bills and expenses covered.

The money you allocate to fun stuff, whether it’s clothes, hobbies, entertainment, holidays etc can be spent and enjoyed completely free of guilt because that’s what the funds are for.

Freedom from uncertainty

Over the past month I have had the privilege to work with a number of young couples on their budgeting journey, to help them identify exactly what they can afford to spend on buying a house. It is exciting for me to work with these people because I know that by going through the process of showing them how to budget for a house, they will have a very clear understanding of what they can truly afford to borrow and ultimately how much they can afford to spend on a house. By setting up a good personal budget and entering all the costs associated with home ownership, we can get a black and white answer that removes any doubt and uncertainty. Having a good budget will provide you with the answers you need for just about any financial decision: how much can we afford to save each month, how long will it take to pay off our debt, can I afford to take a lower paying job, or can I start my own business? A budget will provide you answers to all these questions and remove the uncertainty.

Freedom from financial anxiety

Similar to guilt, financial anxiety can be all consuming and is an awful burden to live with. The primary source of financial anxiety is fear of not having enough and not being able to see yourself clear of the financial mess you are in. As a budget coach at Grandma’s Jars, I have regularly come across new clients who were afraid to open their mail, fearful of what bills might lurk inside. It is my experience that the anxiety typically outweighs the reality of the situation; in the absence of cold hard facts anxiety feeds upon the unknown, imagining Armageddon.

By sitting down and methodically going through the budget process, not only can we quantify the severity of the current situation but we can put ourselves in a powerful position to do something proactive to turn it around. Personal budgeting replaces the unknown and provides a clear roadmap for the future – in the process, removing the anxiety.

Freedom from financial tension in relationships

I read an article a few years ago that indicated that the number one cause of divorce in Australia was communication issues and the number two cause of divorce was financial issues. Interestingly, the number one topic that caused communication issues was – yep, you got it – financial issues!

When you think about it’s really not that surprising. After all, we come together with different experiences, different family values, different expectations and different ways of managing money. Unless we have a constructive discussion about how we will manage our money together, financial tension is bound to occur at some point, even in the strongest of relationships.

The primary cause of financial tension is the lack of an agreed framework for how you will manage your money as a couple. The secondary cause of financial tension is lack of mutual agreed priorities and goals.

Establishing a realistic personal budget provides you with a constructive framework that helps guide your spending decisions. A good budget sets mutually agreed spending boundaries and provides a positive forum to discuss priorities and mutual goals.

While there is a no doubt that a budget will put some constraints on your spending, there is no freedom in spending what you like when you like if it comes with guilt, anxiety, uncertainty and relationship issues.

A good budget gives you a road map to achieve the things in life that are really important to you without the emotional baggage that comes from ‘flying by the seat of your pants’.

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