Setting yourself a budget and managing it is one of the most fundamental principles of good financial planning.

Legendary investor Warren Buffett is famous for saying, “Do not save what is left after spending, but spend what is left after saving.”

Putting money aside for saving, investing, retirement planning or even a rainy day before you start to spend is another fundamental principle of good financial planning. Of course once you have decided on how much money you are going to save each month you need to budget how you are going to spend the rest.

Spending more than you earn is a guaranteed way to financial ruin. 

Why don’t we budget?  

So if having a budget is so crucial to the process of building our wealth and financial freedom why do so many of us fail to do it?

Some personal research on this subject seems to suggest some of the main reasons as follows:

  • Can’t be bothered.
  • Sticking to a budget is hard, especially if it is new to you and you have to make lifestyle changes.
  • Making a budget isn’t very exciting.
  • Don’t see the long term value in saving.
  • Lack the financial education to budget.   

Now this article is not about helping you create a budget. I’ll happily explain that in a separate video. The good news is that there are now some fantastic tools and resources to help you create a budget, requiring minimal effort from you.

Personal finance apps can help you see all your finances in one place

Instead of making a budget, try this

If you are one of those people who haven’t tried or don’t stick to a budget then don’t worry about that for now.

Consider doing this instead……..

Just start noticing what you are spending your money on.

Rather than be very disciplined and trying to reconcile a budget each month, just keep a note of what you are spending your money on and where.

So if you go to the coffee shop and buy a coffee just keep the receipt and write it down. Do this with all your spending and then look back at the list at the end of the month.

I promise it will be a real eye-opener for you.

Yes I know this sounds like work, so better still, use a personal finance app that pulls through data from your bank accounts and categorises the spending for you. This will take hardly anytime at all.

Knowing where your money is going will hopefully help motivate you to make the lifestyle choices you need to make to ensure you can budget in the future and achieve your financial freedom.

If you would like to be kept up to date with financial planning tips and insights then please request our Financial Freedom email series below. For a more detailed consultation at our expense to discuss ways to better manage your cash please give us a call.

Risk warning:

Stock market linked investments and any income from them, can fall as well as rise and is not guaranteed. Any figures quoted are for illustrative purposes and should not be taken as a forecast or guarantee. Past performance should not be seen as an indication of future returns and clients may get back less than they have invested.