Honesty hour: it’s taken me a long time to admit this to myself (and you), but I don’t know how to budget. Or more accurately, I didn’t know how to make or use a budget before last month. Now before you say to yourself, “but Courtney, you have a personal finance podcast, how can you possibly not know how to budget????”
Now let me let you in on a little secret. I thought I knew how to budget. I honestly did. I was really good at saving my receipts, putting them into a box for a few weeks, pulling the pile out and then entering the information from the receipt into my Excel spreadsheet, and then filing the receipts away in 12-month receipt organiser. I was really proud of my spreadsheet – it seemed to do a lot. Keyword: seemed. The only problem with my spreadsheet was that it didn’t really tell me anything… that is anything personally meaningful that made sense to me. So essentially I was left with a really intense expense tracker, not a budget.
And I think that’s where the lines blur a lot of the time and where confusion occurs. There is a huge difference between an expense tracker and a budget – tracking your expenses looks backwards at what you’ve spent and budgeting looks forward to make predictions on what you will spend based on what you have spent.
I think, like everything else, there is an explanation to why we have trouble creating a budget and using it – because we don’t want it bad enough. And I know that was true for me. As a student, I worked strictly during the summer months and used my earned income throughout the school year – so essentially my budgeting strategy was to ‘make it last’. Now, as a full-time working post-grad, that strategy has obvious and apparent pitfalls.
I think there’s a lot of pressure built around how you’re supposed to budget. Thanks to the help of talented creators and masterminds behind budgeting apps and software these tools appear to take away the intimidating and overwhelming aspect budgeting brings.
However, for me, this is where it all fell apart. Because what is not blatantly apparent is that while these tools are amazing at actually helping you use your budget they don’t teach you how to budget.
For me, finally learning how to create a budget did not take place within any app or software program, but rather with pencil and paper. I came across a budgeting journal at Michael’s, the arts and crafts supplies store, and instantly knew that this was the solution I needed. I was able to have a high-level overview and more control.
For me, budgeting finally took a turn for the better when I understood what I needed to do to succeed, had the motivation and drive to succeed, and lastly, embraced simplicity.