The Mounting Costs of a Life with No Budget

 

I’ve often heard people say “I just can’t bear to see what my actually money situation is” or “I just can’t deal with it (budgeting)” While this course of action can seem like a good idea at the time, in fact it may even seem like it’s helping you avoid stress, in the long run you will look back and wish you had paid attention to your financial situation sooner.

There are a lot of myths about budgeting. Here are just a few

  1. They’re too restrictive. If I have a budget it means I have to cut out all the things I like. .
  2. It takes too much time and is too hard to work out.
  3. I don’t get a regular income so I can’t do one.

If your perception of budgeting is in any of the above statements, it’s important to change your mindset right now and see that budgets are actually meant to liberate you. The truth is that the mounting costs of having no budget will eventually lead to financial stress and the probability that you will have to give up all the things you like until you get back “in the black”

Without a plan you subject yourself to the likelihood of the following burdens.

  1. Crippling debt.

As of last year, the whole of Australia had a hefty $32 billion worth of credit card debt. And while you might consider yourself only a small part of that enormous debt, the fact is that credit card money is not your money. It is the bank’s and using it means it’s going to cost you. (unless you are one of those people who pays their credit card bill in full each and EVERY month)

Not having a plan is liking riding a bike without a helmet or rock climbing without the necessary harnesses. You are exposing your finances to so many debt traps, such as financial emergencies, impulse shopping sprees and peer pressure.

Have you ever noticed how banks and credit cards companies show you ads of how exciting life is with your shiny new credit card but neglect to show the part where you have to pay it back for years with plenty of interest! You are proverbially smacked in the face with your card’s dues.

  1. Confused priorities.

Let’s say you have $200. You can use it in many, many ways but at the end of the day it’s still the same $200. You could go out to dinner and a movie with friends, buy some nice clothes, buy a new gadget, be prepared for the next electricity bill, save it for a holiday, invest it.

This problem with having no plan is that you try to do too many things with that $200 and the next $200 and so on.

The beauty of having a budget is that you can work out what is most important to you and prioritise where that money will go to give you the greatest value.

Is not having to worry about paying your next electricity bill more important than a new gadget?

Is investing in your future more important than some new clothes?

Is going out with friends important but so is a future holiday? You could look at ways you could manage both. Perhaps do something less costly with friends and put more towards the holiday.

Don’t get me wrong, if a new gadget or clothes is important to you, that’s ok but not when it is at the expense of your peace of mind and financial future.

The point of your budgeting is to take the money you have and make the most of it based on what is most important to you, Don’t leave it to “someday” in the future and then look back and regret your decisions.

  1. Money mysteriously disappears

Lastly, you have the ever gnawing feeling that you should have more money in the bank but you just can’t put your finger on where it went. When you don’t have a system in place such as a regularly monitored spending plan, it becomes harder (and more stressful) to determine where your money is going and what changes you can make if needed to improve your overall cash flow. In a lot of cases I see, people have no idea they are still paying for things that haven’t used in years, like a gym membership.

Have a plan for your money, make sure you know where it is going and that it’s going on things that matter most to you.

To summarise, Be Brave! Give your finances the attention they deserve and create a better future for yourself. Liberate yourself from the stress of not knowing. You might just find after further investigation that it isn’t as bad as you think it is or that there are simple solutions to address the issues.

If you’d like to know more about getting budgeting support go to our website

www.yourmoneyhabit.com.au

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