Budgeting secrets (for people who hate to budget!)


Do you know the true purpose of a budget?

According to a recent National Foundation for Credit Counseling (NFCC) poll, the majority of people don't. In fact, 57 percent of respondents viewed a budget to be nothing more than a restriction on their spending.

The irony here is that it’s just the opposite! It may sound surprising, but look at it this way:

“A budget actually provides the structure through which a person can be in charge of his or her spending, directing the dollars to their best use,” said Gail Cunningham, spokesperson for the NFCC. “Spending should be a reflection of a person’s priorities, but without a plan, the priorities often get pushed aside in favor of the tyranny of the urgent.”

If you are reluctant to create your own budget, think about the real reasons you’re avoiding it. Is it because:

a. You’re afraid to see the real numbers?

b. It seems too time-consuming?

c. It seems too difficult?

d. All of the above?

If you answered “d”, I'm right there with you!

When I first joined the “real world” after college, the thought of creating a budget seemed like such a boring, daunting task. I didn’t feel that I spent my money frivolously, so why add a layer of unnecessary constraints to my life?

In my mind, a budget was something that would be nice to have, but it wasn’t a necessity.

And then I was dealt a harsh dose of reality.

You know all of those little “emergencies” that personal finance experts are always warning you about? Yeah, those happened — all at the same time. Then, to add insult to injury, I ended up with a few hundred dollars in overdraft fees. And that was surprisingly difficult to bounce back from!

And to think, it’s all because I hadn’t had a plan. A simple, silly little plan could have saved me hundreds, if not thousands, of dollars in the long run.

So after months of throwing money away, one $25 fee at a time, I decided to bite the bullet. I sat down at my computer and began the simple task of adding up how much debt I owed.

I didn’t use a fancy program or anything that I felt would complicate things or overwhelm me. In fact, the first time, I literally used a pen and a notebook. And here’s what I did:

  1. I logged into each account, one at a time, and wrote down my balances, noting both the total balance owed and the minimum payment due each month. This way, I would know the total amount of debt I owed, in addition to the total minimum I needed to put toward my debt each month in order to avoid falling behind on any of my accounts.
  2. Once I was finished with that, I wrote down all of my fixed expenses for each month. I’m talking utilities, internet, cell phone, rent (or mortgage), etc.
  3. Then, I added the monthly totals for my fixed expenses and my debt payments. The result was the amount of money I absolutely HAD to pay each month in order to remain current on my bills and debt payments.
  4. I took that amount and subtracted it from my monthly income (after taxes, of course), and that told me the amount I had left to put toward everything else.

And here’s where the irony comes in.

I honestly thought that knowing the amount of money I had to spend at the end of the month would feel restrictive. But the thing is, that amount is the same whether you choose to acknowledge it or not. And in the past, I had chosen not to acknowledge it. And that made every month a gamble.

Not only was I gambling with the present (Will a quarter of a tank of gas last me until payday??), but I was also gambling with the future. Because, by not having a spending plan, all those overdrafts I mentioned earlier, were literally sucking up my future earnings.

And when you realize that a full day’s work barely covered the amount the bank was charging you just for being irresponsible, it gets old – fast!

But when you finally just sit down and do it, it’s impossible not to feel a sense of freedom. Because now that you are the one who controls where your money goes, you can finally start making smart financial decisions!

What about you? How do you budget? Share your tips by leaving a comment on this post!


Jessica Horton is a former copywriter and community manager at MMI.

  • The Consumer Federation of America (CFA) is an association of nonprofit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization's Board of Directors.

  • Since 2007, the Homeownership Preservation Foundation (HPF) has served as a trusted, neutral source of information for more than eight million homeowners. They are partnered with, and endorsed by, numerous major government agencies, including the U.S. Department of Housing and Urban Development and the Department of the Treasury.

  • The mission of the U.S. Department of Housing and Urban Development (HUD) is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD works to strengthen the housing market in order to bolster the economy and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; and build inclusive and sustainable communities free from discrimination.

  • The Council on Accreditation (COA) is an international, independent, nonprofit, human service accrediting organization. Their mission is to partner with human service organizations worldwide to improve service delivery outcomes by developing, applying, and promoting accreditation standards.

  • The National Foundation for Credit Counseling® (NFCC®), founded in 1951, is the nation’s largest and longest-serving nonprofit financial counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services.