There are many different budgeting methods out there floating around in the ocean of information that we call the internet. Some are simple and some are complicated.
A lot of them don’t work. This makes it hard to find a method that will work for you.
Why is budgeting so difficult?
For that, I think we need to look at the definition of “budget.”
Merriam-Webster defines the verb of budget two separate ways with those being broken out in two additional ways each.
So that’s four possible definitions in total. They are:
-to put or allow for in a statement or plan coordinating resources and expenditures: to put or allow for in a budget
-to require to adhere to a budget
-to allocate funds for in a budget
-to plan or provide for the use of in detail
Anyone else confused?
Maybe I’ve been out of school too long but that seems to overly complicate what it means to budget, especially when you’re talking about personal finance.
So let’s simplify budgeting.
My definition of budgeting is “the act of tracking your finances so you don’t spend too much or too little.”
Simple and sweet.
In budgeting, if you take someone else’s method and apply it to your life to the letter, you will almost always end up spending too little or too much in certain areas of your budget.
The reason for this is that everyone is different.
Everyone’s life is different and everyone’s situation is different. It’s important that you are adjusting whatever method you choose to fit your own lifestyle and goals.
Think of it this way.
If you’re ruling your own kingdom and try to apply another king’s methods to your kingdom, it’s not going to work because your kingdom is different. Your kingdom is your finances.
It is also possible to spend too much or too little on your overall lifestyle as well. For instance, you may be spending too much on planning for your retirement (i.e. saving too much), and spending too little to actually live life in the present.
It could also be the much more common issue of spending too much for your life now and not saving enough for retirement.
It’s important to learn about the best methods available to you, though, so you can pick the best one for you.
By picking the best method for you, you also won’t be spending too much or too little time in managing your budget. It’ll be just the right amount of time.