Can you afford to…join the gym? pay for college? splurge on a nice vacation?
We’ve all done it at some point: made a purchase or monthly financial commitment only to realize a month or two later that we couldn’t afford it. We all make mistakes, but let’s be real: why are we buying things when we don’t know if we can afford them?
Budgeting seems simple enough: income minus savings and expenses. If the answer is positive, good job; you’re not spending more than you earn. If the answer is negative, then you’re spending too much. If it was really that simple, then everyone would do it, right? Unfortunately, no.
It’s true that a bigger paycheck does not mean a better life or a bigger bank account. People with very comfortable salaries still use credit cards and pay interest simply due to poor planning. But with adequate budgeting, it doesn’t have to be this way.
In my first blog post, Insufficient Funds, I discussed whether or not we believe our paychecks to be sufficient. It’s true that we should believe God can and will provide what we need. But what’s also true is that we should be responsible with what we earn and spend. We need to learn how to budget our resources. It’s not either God provides enough or I have to budget; it’s both God provides what I need and I should be responsible with what He provides me (via my paycheck, an unexpected gift from a friend/family member, etc.).
If you want to be responsible with your income, then create a budget. If you’re tired of regretting what you’ve spent, try creating a budget. Budgeting simply means knowing where your money is going. It doesn’t mean you have to rigidly track every single penny.
For example, budgeting means being aware that you have large, unnecessary dining out expenses or recognizing the need to save for property taxes due in July. There are plenty of free resources available for budgeting. In fact, many banks have budgeting software built into their online banking programs. But if you want to keep it simple, all you really need is an Excel spreadsheet.
Challenge yourself to list out all your monthly expenses, including any items that are due quarterly or annually. Then, compare your list of expenses to your annual income after taxes. If you have more expenses than income, start by reducing the expenses. If you have more income than expenses, then create a plan for the remainder. Creating a plan for your income will help you avoid “spending regret” and will help you gain a sense of control over your finances.
Do you have a budget? If so, how has it helped you financially? If not, what has kept you from creating one?
Dishonest money dwindles away, but whoever gathers money little by little makes it grow. – Proverbs 13:11, NIV
Featured Image By Pixabay
This is an updated edition of a post originally published on tableofriches.wordpress.com