Budget Categories Are Not Licenses to Spend

fun money

On one of the financial forums I frequent, a woman who was deep in debt posted looking for help. The main problem was that she couldn’t understand how their debt had ballooned because, “We have a budget.” When other posters started asking for more details, it emerged that she had gotten a budget sheet out of some book that had all kinds of categories and percentages listed. What she failed to take into account was that this budget sheet was just an example, not the gospel truth about what every budget in the world should or would look like. As a result, she had lots of categories that she couldn’t even afford and several where the percentage of money related to her i

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4 Responses to Budget Categories Are Not Licenses to Spend

  1. So very true. And this example can be adapted to everything in life really. When anyone is given any type of information whether it’s financial, medical, education, etc. You have to decide if the information applies to your situation and works with what your goals are for your life. It doesn’t matter where or who the information comes from.

    Suze Orman and Dave Ramsey give great advice and have wonderful financial techniques but I don’t agree with all of them. I use what fits my financial goals and leave the rest. I read a book about 20 years ago that said if I invested $10k in growth mutual funds that in 20 years time using the past history of the stock market I would have one million dollars. Had charts and everything to prove it. lol

    FYI: No I did not invest directly with them, no money was exchanged, I invested independently, did my own research and choose a top mutual fund that still exists and is doing fine.

    But that fund didn’t bring in the one million as promised and I did not give up on investing in the many other financial vehichles available. Just as Jennifer has posted above, just because it’s in a book, or on a tv show, some financial advisor says it doesn’t make it gospel or fit the goals of your life or income.

    Get as much information as you can, from many different sources, use what fits your financial life and leave what doesn’t or won’t work for you.

  2. Aleta says:

    When I was a young married woman, I had convinced myself that I lived on a budget because I had a month long plan divided into 4 or 5 weeks. What I did was allocate the money to what had to be paid. I didn’t have a true budget until I signed up for a program and tapes that taught me what budgeting was all about. I did the percentages and that was a great guideline for me. The fun money was only $10. a month when we were coming out of debt. That budget was then and later life changed for us and it changed again.

    Today, we have gone through some emergency situations that have put us in another budget. Right now, we have to pay the essentials.

    The economy changes and so does one’s life. You could become divorced, widowed, a spouse or yourself with an early illness. You have to constantly adjust and tweek your budget.

    I think that what Elizabeth tried to convey in her book “All Your Worth” is that you should be able to live on 50% of your income if the need would arise.

    Good article Jennifer because maybe people use a budget to justify an expense that they can do without or lower.

  3. Minny says:

    I read a forum here in the U.K. called ‘Martin’s Money Tips’, people in debt post their spending and so often resist advice to stop spending on non essentials. Their reasons are always the same – the husband/wife/children must have their ‘fun’ money. That they are in debt seems to whizz over their heads.

    Encouraged by the ‘must have a budget’ idea we made an itemised one. After filling in all the categories we just didn’t have enough to go round, yet we were never in debt and always had money in the bank. What we did was live frugally and then spend on holidays, Christmas, going out etc according to how much we had to spare.

    As people are saying, it works for us yet people we have told about it say one MUST have a budget!

  4. Gail says:

    I have always found it fascinating how much these budgets allocate for clothing on a monthly basis. Even at $50 a month (which is low for many of these made up budgets) that is a bunch of money that can be used towards debt or savings instead. I don’t think I have bought for myself or hubby a single piece of clothing this year. The last thing that I remember buying to wear was a new pair of shoes for my son’s wedding last year. We can’t afford to shop for clothes at the present, but I guarantee you that we aren’t walking around naked! Then the allocations for vacations. Well our son’s wedding last year that we took 3 days off for, has been the one and only vacation since we got married over 10 years ago! We can’t afford vacations so we don’t try to save for them. It is more important for us to keep our heads above water financially than having ‘fun’. We are frugal by necessity and by choice as we have been hit with health problems over the years that takes big inroads into our finances.

    I don’t think I have ever managed to live ‘on a budget’ in my life, but things like Dave Ramsey’s guidelines like first save $1000 for an emergency fund is what I strive for. Life happens and so trying to stick to a budget when income comes in whenever (the joys of self employment) is almost impossible. But dealing with bills on a weekly basis, helps accomplish the big and little goals.

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