Tips, insights and information on general finance topics for better financial plans.
Next to eating healthy, following a household budget is probably the top good idea that people set out to live by that ends up failing them, abandoned with a lingering bad taste. I believe that the reason for this is that Budgets are easy to do and just as easy to do wrong. Also, like diets, success has as much to do with how you think about the point of the thing you create as it does with the thing itself.
Technically, any time you say “I plan to spend this much money for this” you just decided on a Budget. You have forecast what you would spend on something based on your current expectations in specific financial terms. You might argue that Budgeting also requires you to have some kind of time frame like “I plan to spend this much a month on this”. All of this is true, accurate and useless.
I suggest that the most basic useful working definition of a budget (as we mean it here at FinanSavvy.com) should include the things that are required for it to have the potential for improving your spending behaviors. This is true whether you use a pencil and paper, a budget spreadsheet or personal budget software.
We think that means the following:
So that’s what we are talking about here when we talk budgets, especially in our financial forecasting software. A documented, comprehensive, organized, realistic and aspirational personal or family spending plan. We’ll talk more about all of this in later posts.