Imagine having a half-million dollars going through your hands and NOT having a plan for it. The average household income in America today is around $50,000 a year. So, in a ten-year period that is a half-million dollars that you have an opportunity to make work for you. One of my wife’s mottoes is that “there is peace in a plan.” A written monthly zero-based budget is just that… a plan that tells every dollar what to do rather than you wondering where the money went. If you were going to build a half-million dollar house you would sit down with a builder to plan how the money was going to be spent, wouldn’t you?
“The plans of the diligent lead surely to plenty, but those of everyone who is hasty, surely to poverty.” —Proverbs 21:5
Personal finance is 80% behavior and 20% head knowledge. Since the majority of personal finance is behavioral, that means there are spiritual, emotional, and relational implications to how we handle money. How we handle money is an indication of our character.
So why do the vast majority of families not do a monthly budget? Most people don’t like the word “budget.” They think it constrains them or maybe a budget has been used to abuse or punish them in the past. Some people have “tried” budgeting and say that it didn’t work. Some avoided creating a budget because they were scared to find out where their money was actually going.
4 Reasons You Should Create A Monthly Written Budget
- Avoid Crises – A written plan makes it easier to deal with a crisis, rather than living a life that is management by crisis. Most unexpected emergencies are not really unexpected. Cars break down, rooves leak, and Christmas comes every year. You can put money aside for these unexpected “emergencies” as part of your budget in an effort to build your emergency fund.
- Identify Over-Spending – A written plan will show you if you are spending too much in certain areas. “We spent how much on eating out?!” Yeah… that’s a conversation we’ve had in our house.
- Reduce Arguing – Money fights magically disappear when you and your spouse agree on a written plan. If I budgeted to buy a new laptop and my wife and I agreed on it in our monthly Budget Committee Meeting, then there is no arguing about it and no guilt associated with the purchase.
- Give Yourself A Raise – When you and your spouse agree on, and live by, a written budget you will feel an amazing sense of power and control and there is a feeling that there is more money to work with.
These are just four reasons to do a written monthly budget. The reasons are many! Budgeting may seem difficult to begin with, and like most new things, you will probably not get it right to begin with. In our Financial Peace Classes, Dave Ramsey teaches that it takes at least 90 days to develop this new habit. Dave also asks a question that the answer to could be telling…
Question: Do you budget? If not, what is holding you back? Leave a comment below.