Budgeting: Is it Right for You? (The Pros and Cons)

To budget or not to budget.  That is the question.  Budgeting is a big commitment that requires lots of your time and energy.  So before you make such a big decision, it is important to weigh the pros and cons of having a budget.

As someone who used to struggle with my finances, I can totally understand your dilemma.  Should I start budgeting?  Do I even need a budget?  All the financial gurus say so.

Well, I've got news for ya.  It's not up to those finance gurus whether you should create a budget or not.  That decision, is up to you.

So.  Do you need a budget?  Maybe.

There are many pros and cons of having a budget.  We'll need to take a more in-depth look at them first.  Then you can make your decision.

Buckle up cause we've got lots of ground to cover.  We'll get started with the basics.  But first.

Here's a quick list of the pros and cons of budgeting:

What is a budget?

A budget is a financial plan used to keep track of your income and your expenses.  It is where the money you are paid gets recorded and allocated, or placed, into an expense category.

These categories will differ from person to person but they generally include housing, utilities, transportation, food, and entertainment.

You can make your budget for the year or on a monthly basis.  But you should revisit and redo your budget often to make sure you are on track with your financial goals.  

By using a budget, you are able to see how much money you are making and where you are spending your money.

Does everyone need a budget?

No.  Budgeting is not for everyone.  For some, budgeting is a godsend.  It helps them allocate their money and stick to a plan.  If you are the type of person who needs rules to follow, then budgeting might be right for you.

However, for some of us, budgeting is a pain in the you know what.  It takes up our precious time each and every month.  And for what?  We don't even look at it once its made.

I'm pretty sure I wrote one up a few years back.  No idea where that went.

So you see, when it comes to your money, it is up to you how you choose to handle it.  If budgeting works for you, have at it.  But if budgeting is not your thing, there is no reason why you need to have a budget in the first place.

What are the pros of having a budget?

While I may not like budgeting or having a budget, there are some advantages to having one.  I mean, would anyone use them if they didn't have a good use for it?

Let's take a look at some of these benefits of having a budget below.

Easily Keep Track of Expenses

By budgeting, you know exactly where your money is going because you've written down your expenses and have allotted money for each.

So it is very easy to keep track of your expenses.  When you are just starting out with a budget, you may miss a few expenses here and there. But no worries.  That is why you would review your budget often.

So you can make adjustments.  Then soon enough, you will be able to account for each and every expense you have.

And when you know where your money is going, you have more control over it.  

Increased Awareness of Your Financial Situation

Having a budget gives you a bird's eye view of your finances.  It tells you how much money you have coming in and just how much is going out.

And as they say, Knowledge is Power.  With your new found knowledge of your financial situation, you can start to take control of your money.  

You can cut the expenses that really aren't necessary.  Or increase the amount of money you have coming in so you can afford the lifestyle you want.

With this increased awareness, not much will catch you off guard.  Car breaks down? Got it!  Stubbed your toe? Grand!

No more going into tons of credit card debt because you forgot to pencil in car maintenance and the usual wear and tear.

Helps You Make Money Decisions 

With your increased awareness of your financial situation as a whole, you will be able to make better money decisions with ease.

I mean, you'll practically be the Yoda of your finances.  

"Do. Or Do not. There is no try."   

When you have a budget, you know just how much you want to spend on groceries, on gas, and entertainment.  You've got your priorities in order.  And you know exactly where you want to spend your money.

Because of this, it will be easier to say "No" to the things you don't need or want.  And, quite frankly, just don't fit into your budget.

BMW or Honda?

You got BMW money?  Take a look at your budget.  No?  Well, case closed. Honda it is.

Gives You Rules to Follow

Another benefit of having a budget is that it gives you clear rules to follow.  

It is practically an instruction manual of what you need to do with the money you earn.  And if you just follow the instructions, you will reach your goal.  

How nice is that?!  Talk about pushing the easy button.

And as a bonus, having a budget can really go a long way in smoothing out your relationship with your partner.  

Can Help Prevent or Smooth Out Marital Problems

Everyone knows that finances can really be the undoing of any 'solid' relationship.  Well, budgeting can help with that.  Especially, if you and your special someone do not see eye to eye on money matters.

You may be more rich snitch inclined and he may be just a wee bit more practical.  This is when having a budget can really be beneficial.

By having a budget, one that you've made together, you have your finance instruction manual set.  You both know the rules and have agreed to follow them.

So whenever you have a disagreement about money.  Head on over to your budget and see what it says.  I'm telling you a budget can save your life.  And your marriage.

Makes it Easy to Plan for the Future

Choosing to have a budget not only gives you insight into your current financial situation but you can also use it to plan for your future.

By having a budget you are making plans for your money.  Plans that you will revisit and revise often.  This makes it easier to plan for big changes that may be on the horizon.

Planning to buy a house?  Start incorporating a down payment fund into your budget. 

Looking to start a family soon?  Get that baby fund up and running.

Not only does having a budget make it easier for you to plan for the future but creating a budget in and of itself forces you to think in advance (if you are budgeting properly).

After all, that's what planning essential is.  And budgeting is the ultimate plan for your finances.

Makes it Easier to Achieve Your Financial Goals

As I mentioned before, having a budget is like having an instruction manual, a rule book, where, when you follow it to the tee, you can accomplish what you set out to do.

That big house on the hill you've been dreaming about?  It just got that much closer!

Having a budget puts you on the path to accomplishing your financial goals.  It gives you an outline of the exact steps you need to follow to make your dreams a reality.

So have at it!  And don't be afraid to dream BIG!

Helps You Keep Track of Your Progress

Budgeting is not a one and done sort of thing.  Ideally, once you've created your budget, you should be checking back in on it every month.

By keeping track of your expenses every month, you can compare what you've been saving and spending to what you set out to save and spend in your budget.

In doing so, you can monitor just how well you have been sticking to your plan and your progress in saving for that down payment or in paying off your student loans.

In other words, having a budget keeps you accountable.

What are the cons of having a budget?

I may have painted too rosy a picture of having a budget.  And you might be thinking, well if budgeting is so awesome, are there any reasons why I shouldn't have a budget?

Well, Jenny, yes.  Yes, there are.

Budgeting Takes Time and Energy

If anyone has ever told you that budgeting is easy, I'm sorry.  They proper lied to you.  Budgeting takes work.  And commitment. 

When you decide to start a budget, you must make a commitment to actually see it through.  It is not a one and done sort of thing.  You must continue to come back to it, review it, and make changes to it.

The results from budgeting don't come right away so you will need to commit to budgeting for at least a year to test it out.

And for those of us with busy, hectic lives, all that added work sounds like a no-go.  So budgeting is probably out of the question.  

I mean, you want me to take hours to plan my budget. Then on a regular bases keep coming back to it and revising it?  

Ain't nobody got time for that!

No Quick Wins

Another downside to budgeting is that it takes time before you see any result from all of your effort and hard work.

Sure your savings may be growing thanks to your budget but you may not actually see that growth till months later.  

Especially if you're new to budgeting and still have to work out the kinks so that you are actually saving money.

For people who need constant motivation and encouragement to stay the course, having no quick wins to inspire you to keep going may set you up for failure before you even begin.

Waste of Time and Money

Let's be honest.  For most people, budgets just don't work.  You spend hours each and every month crafting and re-crafting a perfect budget that, let's be serious, you aren't going to follow.  Let alone look at once it's finished.

But you stick to it because that's what all the financial gurus and advisors tell you you should do.  You are wasting good time that could be spent in another more productive activity.

And what's worse, you may even spend money on a fancy budgeting app to help you.  But does it?  No.  Because budgeting just might not be for you.

So instead of wasting your time and money planning how you are going to cut back on spending, you should be thinking of ways to make more money or actually out there making it!  Enter The Side Hustle.

It's Limiting and Confining

There's no getting around it.  Having a budget really boxes you in.  You can feel it.  And it's probably why you've never liked budgeting to begin with.

The whole concept of budgeting is really to control or limit your spending so that you can maximize your savings.  Good in theory but maybe not so useful in reality.

These limitations can make anyone with a mild sense of claustrophobia panic.

And the real problem with budgeting is that it limits your thinking as well.  You become so focused on cutting down and limiting yourself that you leave no room for growth.

And if you truly desire financial freedom, you should be thinking expansion not limitation.  How can I make more money?  Not what can I cut?  

Don't get me wrong.  There is definitely a time and a place for giving things the good ole snip snip.  Especially things that aren't truly important to you.  But that shouldn't be your focus.

One thing is for sure, you don't get rich by making cuts.  Only by making money.

Takes the Fun out of life

Budgeting is boring.  No ifs, ands, or buts about it.  It is most definitely a snooze-fest.  So don't listen to those crazy people who tell you otherwise.

And can you imagine having to do this monthly? for the rest of your life?  Yikes! No. Thank you.

Not to mention, planning how much you can spend eating out, hanging with friends, or partying, can really put a damper on life.  

Instead of enjoying your time out on the town, you'll be thinking about how much you can and can't spend.  And the things you can and can't do.  

You don't want to find yourself out at happy hour with the crew and not happy.  Why?  Because you are too busy counting your coins.

Can Cause Marital Fights

I mentioned budgeting as a pro for helping to prevent or smooth out financial tiffs with your spouse but there is a flip side to that.

When you decide to start budgeting you're going to have to have a serious talk with your partner.  This can actually be the start of a fight. 

It can add more drama and stress to your relationship especially if you guys do not see eye to eye on your finances.  

Moral of the story.  When budgeting with a partner, do so with care.

Not Good for a Healthy Money Mindset

Having a healthy money mindset is key to having a stress free financial future.  Without it, you will forever be living paycheck to paycheck, in loads of debt, and struggling to make ends meet.

And if there is one thing that can take the wind out of your money mindset sails, it's budgeting. 

But.  How can this be?  Budgeting is supposed to make you good with money right? right?

Well, the problem with budgeting is that it requires you to focus on the wrong thing: Limitation.  

Definitely not something you want your mindset geared towards.

A healthy money mindset means you are not thinking limitation but growth.  You should be thinking about how you can grow your money.  And all the abundance that is out there for the taking.

It's not about holding money hostage and locking it down in your mama needs a new pair of shoes fund.

Every now and then, you need to let your money and you breathe.  So take a breath.  And kick that budget to the curb.

Based on Assumptions

A big problem with budgets and, probably one of the main reasons that budgeting fails, is that it is really all based on assumptions.  This is especially true for those of us in sales or running our own business.

You assume that this is how much money you'll have coming in (and fingers crossed you don't get fired or laid off) as income.  Then you guess-timate your monthly expenses.  $200 for groceries? Mayyybe.

I mean, can you really know without a doubt exactly how much you're going to spend on groceries or going out?

Then from all this uncertainty, you're supposed to have a solid plan with which to build your financial future on.

Does this sound like a good idea? Um, No! 

That's why so many people who budget are still be caught by an unexpected event and end up going into massive debt.  And where is their budget now? 

Budgeting works only if you can plan for everything.  But if you don't have a magic eight ball that can tell you your future, chances are, some things are going to fall through the cracks.

All in All

There are many pros and cons of having a budget.  So before you get all gung-ho about crafting your perfect budget, really consider whether it is right for you.

Your finances are your finances.  And everyone's journey will be different.  So definitely weigh the pros and cons of any financial tool you are thinking about using before you dive in.  Even a budget.

You don't want to just take my word for it or some finance guru's word for it.  Because we probably don't know, and may not understand, your specific situation. 

Personal finance is meant to be personal after all. 

But there is one thing I do know.  You're a go-getter.  You've already taken the first step in taking control of your finances.  You're doing your own research and gaining knowledge.

It won't be long till you're basking in the glory of financial success.  You totally got this!