Budgets: Boring or Beautiful?

The mere mention of the word 'budget' can conjure up some very negative feelings.  It sounds restrictive and serious.  To me, I see a budget as freedom.  Freedom from the guessing, freedom from the worry, and freedom from the guilt of spending.

A direct comparison to the word "diet" jumps to mind.  Again, it makes us feel like we are being denied something.  However, your diet by definition is what you eat (not what you don't).  As such, your budget is what you spend (not what you can't have).

I've always used a budget in some form for as far back as I can remember.  In the beginning, it was a written out list of high level expenses, which advanced over time to a rather detailed (although still simple) spreadsheet, to now using online tools like Mint.com (free for basic usage).  No matter what tool I've used though, the premise has been the same; I want to know where my money is going.  The versions I have used are typically based on a cash flow model.  This assures that I have enough money in hand when big expenses (Christmas, Property Taxes, etc) come up.  I like to detail out each expense category.  In my case, I use categories and subcategories, because I'm a bit of a nut and I require this level of information. For example, I have a category for Food.  From there I sub-categorize by Groceries, Dining Out and School Lunches.  If you have no need for that detail, keep it at the high level category. 

The important thing in your budget is being realistic.  If you HAVE to have a Starbucks coffee every morning, then add the line in for Starbucks.  If your joy in life is a monthly pedicure...no problem...put it in.  Once these luxuries become part of the budget, then you can stop fretting whether to spend the money on them.  Just, let it go and think "it's in the budget". Add in all of the things that make up your lifestyle.  Don't forget those occasional expenses (car insurance, Grandma's birthday, etc).  Then look at the total expenses versus what you are bringing in, and what you stash away for savings each month.  If the numbers work, congrats and enjoy.  If things are looking a little upside down, then start evaluating the line items until you reach a balance. 

A sound budget is a key step on the journey to a simplified life!