Friday, November 6, 2009

Budgets: Why We Need Them and Why We Don't (anymore)

Why we need budgets: In my mind, a budget is a tool used to categorize spending and limit how much spending occurs in those categories. I believe a budget is a useful tool for those who overspend or for those who have no idea where their money goes. I do not consider myself an over-spender, but before I started keeping a budget, I had no idea where my money was going.
I needed a budget because I was completely clueless about my personal financial life. It wasn't until I started my budget that I became knowledgeable about where my money goes. It's true that knowledge is power because the only way I've been able to bring my expenses down is knowing where my baseline is. For example, it was only after I saw how much we used to spend on groceries that I realized we could do much better.

Why we don't need a budget anymore: We already now know exactly where our money goes. As a couple, we have been keeping a budget for 7 months and personally, I have been keeping one for almost 2 years. After keeping a budget this long, we know exactly how much we spend in any given category every month and we generally stay within that range. Therefore, keeping a monthly budget at this point would be a waste of our time.

So what now? Do we never look at our expenses again? Nope. We need to figure out a new way of tracking our expenses that's less cumbersome than a traditional budget but just as valuable. It's going to take a little brain-storming and discussing with the boyfriend to figure out how, but tracking personal finances doesn't have to end with the budget.

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