What would you think of a person who drove his 2013 Corvette convertible around while wearing a blindfold. How about someone who kept his eyes glued to the rearview mirror as he blazed down the highway? Would you think that person is nuts? Would you consider that person dangerous? Would you be surprised if I told you this is exactly the way most people operate a major aspect of their life?
The illustration above is the way many people operate their finances. Ask 10 of your friends and neighbors if they keep a budget and you’re likely find few who do so. Of those who keep a budget, many do not truly have a budget (forward looking) so much as they have a spending tracker (backward looking). You would never drive a vehicle this way, so why would you operate your finances this way?
Not that fun?
Ok, few people are delighted to sit down with a spreadsheet and map out their spending for the month. Even fewer people like to say no to themselves and restrict their spending on superfluous items. But, if you will give advance cashflow planning (budgeting) a chance, I promise that the rewards will be worth the small investment of time, and you may just save yourself from careening off the road!
Having Financial Agility
When you’re sitting down with all the information in front of you, you’re more apt to see roadblocks and curves in the road ahead. You can look at your home improvement fund or your vacation fund and get a gauge foe whether it’s on track for the upcoming expenses. This lead time allows you to respond to financial challenges earlier: for example, skipping meals out for a few weeks early in the month so you can afford to buy new tires for your car when they’re needed later in the month.
Rather than creating unpleasant restrictions, a budget like that recommended in our ThriveFit page actually makes your life easier and more hassle-free. While your friends are busy worrying and hand-wringing about how they’ll pay for the medical bill they didn’t plan for, you’ll be peacefully executing your spending plan for the month. Although planning ahead doesn’t create more money for you from thin air, when you get your spending under your control, it often feels like you’ve gotten a raise. Anyway, what do you have to lose? If you hate the feeling of being in control and looking in front of you instead of behind, you can always go back to the chaos method….