When most people think of budgeting, they basically picture a huge lock on their purse or wallet, not allowing them to spend any money on fun. Budgeting does not have to be this way, however. A simple budget can bring together spenders and savers, and allow them to live in harmony with one another, rather than constantly arguing and pointing fingers (and possibly even throwing some expensive china).
How Budgeting Helps the Spender
The spender sometimes gets a bad rap in a relationship. Their partner wants to stock pile some money, but you simply don’t understand why. If something goes terribly wrong with the finances, you can always use a credit card as a temporary fix. In the meantime, why not live life to the fullest and have fun with your money today? You never know, you might not have tomorrow.
I somewhat admire the carefree nature of the spender. They see something they want and they hardly think twice about it. Since they know it will bring them pleasure, they simply pull out the cash and buy it immediately. I’m a little slower at this game… I’ll see something I want and then question if I truly need it. I’ll ponder it for a couple more days and see if my urge goes away. If it doesn’t, then I might make a goal for myself to buy this wanted item – something like, I’ll buy this product when my mortgage gets down to $20,000.
Most times, the spender needs to get reeled in a little bit. It might be fun for them to buy items on impulse, but eventually this leads to maxed out credit cards and pennies in their retirement accounts (if these accounts even exist). A budget is perfect for this type of person. Yes, it will restrict their fun a bit, but it will also bring in a bit of responsibility and allow them to save for the future. There can still be some spontaneity in their purchases, but if their spending reaches the max, then they should stop immediately and wait for the next month when they get their next allotment of cash.
How the Budgeting Helps the Saver
Many of you know that I am an extreme saver. I wasn’t always, but when I make outlandish goals to start paying off my debts it seems that all unnecessary spending comes to a halt. Many would think it’s a good thing, but I can be such an extreme saver that I deliberate for days over purchasing a couple of tool hangers for the garage that cost only $10 total.
Hopefully, I am not yet a compulsive saver, because that hardly makes any sense either. These people live on less than 20% of their income and save the rest (for reasons unknown). Before they know it, they have hundreds of thousands of dollars (or maybe even millions) stashed away in their savings account and do absolutely nothing with it. They certainly won’t spend it, because what if something terrible happens and they end up needing it (yeah…like anything is really going to cost someone a hundred thousand bucks…)? An emergency fund this large is a bit excessive.
This is where the budget becomes a great tool for the saver. By budgeting in some money for restaurant spending and entertainment, they feel enabled to spend a little money without freaking out (seriously, this is me, and my budget has actually helped me spend some money here and there). The majority of the population might not understand this concept at all, but for all you savers out there, you are no doubt nodding your heads in agreement.
Again, a simple budget can bring spenders and savers to a common ground. Finally, fun can be had AND savings can be stashed away. What a concept. 😉
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.