Purpose of Budgets : Should you even have a personal budget?

Why does budgeting matter? Money is a tool that enables you to reach your goals in life, but until you know where your money goes, you can’t make conscious decisions about how to use this tool effectively. A budget shows you exactly where your money goes and provides a spending plan that lets you save for the things that are important to you: a new house, a new car, a comfortable retirement, a college education, travel, or whatever your particular goals and dreams happen to be.

There are several universal budgeting concepts that every successful budget will include, but one of the most important features of a successful budget is customization to your needs. Don’t try to force your lifestyle and personal situation into a generic, one-size-fits-all budget. If a simpler approach makes it easier to stay committed, then go for simplicity. If you stick with a realistic, effective budget long enough, the rewards will keep you motivated; in the meantime, do whatever it takes to keep yourself going.

One important aspect of a successful, long-term relationship is working towards common goals, and a budget is a means of achieving them. Couples who can’t come to an agreement about savings towards common goals should sit down and talk calmly and rationally and come to a compromise to resolve this disconnect in their relationship.

It’s okay to have individual goals that the other person doesn’t share, and to provide for a way for those goals to be met, but it’s critical to have basic common financial goals that both people in the relationship agree to and are motivated to work towards. If you can’t agree about saving towards those goals, you’re going to be at cross-purposes that are going to be a cause of ongoing conflict. A budget centered around conflict and resentment is a budget doomed for failure.

If you still can’t figure out why your budget isn’t working, consider the psychological factors at work. What does money mean to you? Do you use it for reasons other than its obvious purpose? Do you use it as a self-esteem booster, to make yourself feel worthwhile? Do you enjoy the heady rush of making a new purchase? Do you use it as a sign of power or control in a relationship?

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