After reading that title you might have thought to yourself, “Budgeting? Is that really necessary?” To be fair, budgeting is often regarded as something that was utilized in years past but has become obsolete. But let me ask you something: when was the last time you sat down and knew exactly where each dollar you own went? When did you last review if you are overpaying for entertainment because you just had to watch the new season of The Mandalorian? Are you sure you don’t have a problem ordering DoorDash to the office every day of the week?
Now let me be clear, I am not trying to assume that you have no idea how to handle your money or that you have a frivolous spending problem. However, what I am saying is that we often do not realize just how much money we spend on goods and services until we actually sit down and crunch the numbers. In fact, according to a study from CNBC, consumers often overspend on many discretionary items by over $140 each week despite their best efforts.
Oftentimes when we are shopping, whether it is in-store or online, we will find ways to satisfy our impulse cravings by telling ourselves, “I don’t really need a new pair of shoes, but this is such a good deal!” We rationalize bad financial decisions, yet we know that these decisions often do not lead to any lasting satisfaction.
Tell me if this sounds familiar: you get home from work and you’re tired from your various duties and meetings throughout the day. You consider your dinner options, and, although you know it would be cheaper to fix some food at home, ultimately you decide to order delivery from your favorite diner down the road. You tell yourself, “It’s only $13 for the meal. That is perfectly reasonable and easy!” However, you forget to account for the $4 delivery fee and the tip that is often expected for delivery drivers. Your $13 meal just turned into a $20+ meal that, if you are being honest, arrived cold and left you feeling sluggish. All along it would have been better to simply cook your own food, save the money, and have some sense of accomplishment at the end of it all. Yet, people all across the nation fall for this same issue every single day.
So, how do we get out of this habit?
I believe the most tried and true way, as you can probably guess, is to budget your money. This is achievable by sitting down and giving each dollar that you own a purpose. By doing this, you will know exactly where each dollar is going.
Gone are the days of overspending for takeout, paying for multiple streaming services you didn’t even know about, and overpaying for your morning coffee. By planning out your finances through a budget you will realize the power of understanding where your money needs to be going, and you will likely even reduce some of your expenses and spending habits in the process.
By reducing your expense through the use of a budget you are quite literally giving yourself a raise. Suddenly your bank account looks a lot healthier, and your spending habits have become much more reasonable and sustainable. It only takes a small amount of effort to sit down, plan out a budget, and get a grip on your finances.
So, what are you waiting for? Get out there, work hard, make a budget for yourself, and give yourself a raise!
By: Daniel Trentham, Marketing Coordinator at CROFT & FROST