One question I get a lot is, why do I need to have a budget? Can't I be in charge of my finances without one? Before I share my opinion on this topic, my instinct as a coach is to want you to answer these questions yourself in the first place. Perhaps start by asking, what does being in charge of my finances even mean? When you answer this, and if you don't have a budget already, perhaps think of how the budget would get you closer to "being in charge" or how it is possible to accomplish this without one.
I've heard before that budgets are for those who don't have enough money and need to keep a close eye on their bank account. Many of you may agree with this statement. If you have plenty of money, there is no need for a budget.
If this statement was true, why have I seen wealthy women who do not follow a budget be anxious or fearful when making certain financial decisions? Of course, there are many reasons. One that stands out is that they don't have a clear picture of where their money is going and how one decision or unexpected circumstance could affect their lifestyle. I've seen millionaires hesitate to change jobs, or make significant changes in their business because they don't know the price tag on the lifestyle they bought into. They keep rinsing and repeating what they know how to do best and continue to work more hours than they want to or need to. They think that a budget is not the answer, but making more money is. I don't think the answer is one or the other. The balance may lie in doing both.
One of the best examples of this balance is Mr. John Rockefeller, the richest person in modern history. He got his first job at the age of sixteen as a bookkeeper. Many will argue that even when he reached his prime as a businessman, he was first and foremost a bookkeeper. What does this mean? He always kept a ledger of his transactions. He was in touch with the day to day impact on his financial books made by every single business decision he made. He had a big picture vision, and the bookkeeping allowed him to make decisions with no hesitation. He did not stop managing his books when he became the richest man in America.
I believe that having a budget is an excellent antidote to financial anxiety, indecision, and confusion. Freeing yourself from these indulgent emotions is so empowering because they keep you stuck repeating the same patterns. A budget moves you forward in the direction of your financial goals. It doesn't matter how much money you have in the bank, having a budget allows you to have a clear vision of where you are now and where you want to be.
I use the analogy of a budget as being a map painted on canvas. You are the artist with the vision, and the canvas is blank. You get to paint the map of your choice. There is always a "You are Here" marker on this map, but you get to choose the colors, textures, and brush strokes to paint all of the places you want to visit. These are the places you want to be in life and your financial and life achievements. You are the artist who created the path and made it possible.
Without a map or, in my case, a GPS, I'd be lost. And even if you think you don't need a GPS and hardly ever use one, you will most likely admit that you've gotten lost before and made the wrong turn plenty of times. I can also hear some of you say that you've gotten lost while using a GPS (it may be my voice I'm hearing), and that is also true. The difference is that with the GPS, you don't have to keep wondering and hope you land on the right street. It will quickly recalculate and show you the next path to your destination.
When I think of spending and earning money without managing both aspects with a budget, I think of doing so with a blindfold in my eyes. Many confuse this blindfold with flexibility, freedom, and spontaneity. The opposite is true. Not planning your spending could lead you to overspend, unwanted debt, living paycheck to paycheck, and unfulfilled dreams. Where is the freedom in that?
Budgets are freeing because they are dream builders. Your clear vision and understanding of your spending patterns and earnings allow you to take all the right turns designed by you in your dream map. Remember that a budget is a product of you. It reflects your desires, goals, values, and aspirations.
I can't imagine not having had a budget when I got divorced. With all the emotions involved in redesigning my life, having to figure out my finances and how to follow a budget might have seemed an impossible task at the time. My years as a stay at home mom and CFO of my home and the skills I practiced during this time, made the transition to single motherhood smoother. I felt empowered because I thought I could handle my finances.
Now, go back to your initial question and ask yourself if it's possible that I may be right about why you need a budget. I'm asking you to consider that the budget is your friend and will help you navigate your financial life. Only you know your "You're Here" point in life. How did you arrive there? Were you blindfolded? Did you get lost along the way? Or did you have a beautifully crafted map made by you that landed you exactly in the place you wanted to be?
I can help you see why you need a budget and the impact of this decision on your own life. Click here to schedule your free mini session where we'll get curious and get to the root cause of why you have not started a budget already.