I have always been intrigued by millionaires. It seemed to be the goal every person was trying to reach. Most seemed to fall short. I was probably a junior in college when I got really serious about researching what the average millionaire did to get there. I kept seeing the recurring themes of “budgeting” and “living on less than you make” in my Google searches. It was at that point I decided to write my monthly expenses down and get on a budget. By the next week, I had lost my “budget” and spent all my money. Don’t get me wrong, my monthly bills were paid, but anything left was gone with the wind. It was then that I realized why millionaires are so rare in our culture. The discipline it takes to do a budget and live by it is no walk in the park.
Fast forward a few years later and my wife and I have full command of our budget. We are out of debt except for the house, contributing 15% of our income for retirement, and have plans to pay our home off earlier than the 15-year mortgage term. Since we’ve been budgeting for quite a bit of time now we’ve realized how the budget has helped us. Here are three reasons why we love, and hopefully you’ll love, to budget.
It doesn’t matter what the process is. It’s always better when it’s efficient. The same applies with personal finance. When you account for every cent there is no unintentional waste.
Normally, when it comes to personal finances, it isn’t the big ticket items that kill you. It’s death by a thousand cuts. When you budget you can PLAN to waste a certain amount of money. I recommend you do so to keep your sanity! Kim and I have built into our budget a blow money category. Kim and I both receive a relatively small amount of money each paycheck to spend on whatever we want. Hell, even our 2-year-old son receives blow money that we use to spend on things he needs.
As adults, you spend so much time in a state of sacrifice for the good of your family that it can drive you crazy. Planning to waste lets the inner kid in you out so you can keep your sanity. However, we don’t want that inner kid to run the show.
Before I started budgeting I had a love/hate relationship with money at the beginning of each year. I loved that I was going to be getting a tax refund, but hated seeing my W2. The regret of seeing how much money I earned that year and how little of it I kept tested my gag reflex. It was upsetting, to say the least. I can say today that I haven’t felt that way in years. That’s because I know where every penny is going. We’re hitting financial goals consistently with the money that’s coming in. If there are any questions about where expenses went in the past I can always go back and look at past budgets.
2. You Will Feel Like You Make More Money
When you become more efficient with your finances you will feel like you make more money even though the amount coming in hasn’t changed. Most people make enough to cover their needs. But when you are able to cover all of your needs and some of your wants there is a sense of freedom and control that comes with that. Suddenly you realize that you can point your discretionary funds to things that YOU want to do instead of feeling like you are working to pay bills.
For me, that sense of freedom and control drove me to find a new job that increased my income. This increase in income allowed Kim to work less hours allowing her to be the main caretaker of our son and avoid daycare completely. In other words, the freedom and control drove us to look for more opportunities to gain more freedom and control by increasing our income. Today, we make less as a couple than when we were both working full time but because we have mastered the budget we can barely tell the difference. We feel like we make just as much now as we did back then and our quality of life is even better!
3. Forces Communication With Spouse
This is by far my favorite perk of doing a budget as a couple. Kim and I dated for 10 years before getting married and they weren’t all pretty. I found that doing a budget forces us to talk about our hopes, dreams, and fears. Naturally, this brought us closer together as a couple. It healed areas where trust had been violated in the past due to decisions not considering the other party. This trust resulted in more intimacy and a more real relationship with each other.
One of my favorite metaphors is that of a pair of ox. I know…it’s a little cheesy but stick with me! The more coordinated the two oxen are the more weight they can pull as a unit. The size and strength of the individual oxen are LESS important than their ability to work together as a team. The same applies with finances in a marriage. It doesn’t matter which spouse is making the most money or which spouse is smarter. Nor does it matter which spouse has the financial know-how. What matters the most is that both parties are in coordination with each other. The more coordinated YOU are as a couple the more you can accomplish with less.
Before Kim and I got married we saw a marriage counselor. The very first item of discussion was finances. The explanation from our counselor was that money issues is the number one cause of divorce in the United States. That honestly blew me away. How could something that feels so materialistic like money be more important than religion, raising kids, sex, in-laws, AND conflict resolution? The thing that’s so unique about money is that it touches these and virtually every other area of your life. Doing a budget together forces you to have to communicate so much that that practice of communicating spills over into all the other areas you share with your spouse.
Kim’s thoughts: Omar stated that out of his 3 reasons for loving to do a budget, his favorite reason is communication with me. I agree that it definitely makes us communicate with each other about our money, but it has also helped with communication in regards to other things. However, my favorite of the 3 reasons is that it makes me feel like we make more money. Doing a budget gives new meaning to the phrase “living paycheck to paycheck.” I wait for payday thinking, “Ooooo. What are we going to be able to accomplish this pay period?!” And this feeling is directly related to doing our budget!