BUD-JIT. The very sound of the word conjures images of endless number crunching and long hours in windowless rooms. And for what? A regimen of sheer deprivation under self-imposed martial law? Or… could it be, perhaps, that we’ve demonized budgets because we have no idea how to get our arms around them?

Look, if we can count calories, we can count money. Budgets are no different than any other regimen, like diet or exercise. We try to stick with these routines because there’s a payoff — a nice physique and good health. And, ultimately, we do it because it makes us feel good about ourselves. So, if we can toss out the junk food, we can certainly toss out the junk spending.

Admittedly, junk spending is not quite as easy to spot as a donut. It usually happens whenever we spend beyond our means to get stuff we don’t need. New cars are the crowning glory of junk spending. But, more often than not, “great deals” are its trademark. Eating out is part of its charm. And, we know we’ve been lulled when we pull out the credit cards toward the end of the month just in case. Suddenly, and without planning to be, we’re back in the vortex of debt. And, we wonder why saving eludes us.
Money management software programs are a useful tool for spotting the glaze of a budgetary donut. Transactions can be downloaded and given a budget category, like “groceries.” Our weak spots can be highlighted with categories like “eating out” or even “great deals.” Soon, the program recognizes and automatically categorizes our spending. At month’s end, click “What Did I Spend My Money On?” This report reveals all. The numbers don’t lie. We can no longer run and hide.

Redirecting uncommitted funds toward debt reduction and savings could greatly improve our financial picture. We can start with a snapshot of our current finances by creating an Asset & Liability Statement. One column lists assets: bank accounts, retirement funds, investments and the market value of our home and cars. The other column lists liabilities: loans, credit cards and mortgage balance. Subtract total liabilities from total assets and, viola, we have our net worth. Capturing — instead of spending — our extra funds empowers us to reduce liabilities, increase assets and keep our bottom line moving in the right direction — up!

Spending money “by feel” and hoping for the best is no way to clear up the murkiness of our future financial picture. A budget represents our informed decisions — not our impulsive ones — about how we should direct our money. With it, we can keep our financial values straight and build a more secure future… one month at a time. And, when we start seeing how our continued restraint at Target can rescue us from a retirement spent at Luby’s, we’ll begin feeling that warm glow of financial integrity in our hearts and the self-respect that goes with it.  

What’s up next? Tax-Free Growth

Berry is not a Certified Financial Planner. She is the self-taught manager of her family’s finances and a cum laude graduate of Texas Tech Law School. Before making any financial decisions, evaluate all information carefully and consider consulting a financial professional.