Three Ways Budgeting Our Money Actually Makes Us Richer (Part 2)

#2 We know where our money is going.

I remember once hearing someone say they wished they had enough money to never worry about how they spend it. I remember thinking, “They are missing out on the power of budgeting."  Regardless of how much, or how little money we earn, knowing where we spend our earnings is critical to our financial empowerment. Keeping track of all of our expenditures puts us in control. We can actually know where every dollar is spent. How does this make us richer? 

Because we take control of the financial decisions ahead of time before the decisions are made for us. Our budget reflects our money decisions before we spend our money. Let’s say we decide to budget $200 month for food. Then we notice between eating out and buying groceries, and we actually spent $300 this month. Because we have a budget, we can either adjust how much we spend for food up to $300 by taking away money in our budget from another expense, or we can start to pay more attention to how much we are spending on food and make cuts to stay within our existing budget. If we didn’t have a budget, we wouldn’t know we overspent by $100.

Once we decide to begin budgeting, we can keep track of our finances in whatever way works best for us. We can budget electronically using budgeting apps, or build spreadsheets on the computer, or take pictures of our receipts and categorize them, or use good old-fashioned paper and pencil. Regardless of the method we choose, the important thing is to keep track of our purchases. Then we can see if the amount we had written down in our budget to spend this month equals how much we actually spent for every area in our budget. If not, we can make adjustments to our budget or to our spending. We can say, I choose to buy this (or not to buy this) because I know how much money I have set aside for this in my budget.

-Written by: Financially Fit Me Founder Kimberly Greenman-