Shhh…. What do you think of that B*****?

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Now that I have your attention, you are probably scratching your head wondering why that would be on a personal finance website.  Shame on you for thinking that!! What would your mother say?  The word is in the news all over the world now.  That magical word is BUDGET.  The congressional budget, state budget, city budget, your personal budget, budget for that trip, some websites use that as part of their web address…this budget that budget… What in the world does the word budget even mean? 

According to my good friends over at Merriam Webster here are the origins of budget:

Middle English bowgette, from Middle French bougette, diminutive of bouge leather bag, from Latin bulga, of Celtic origin; akin to Middle Irish bolg bag; akin to Old English belg bag. First known use: 15th Century.

Now that I read that I can understand what the word budget means, well can’t you?  Think about it, budgeting in essence is using the available resources that you currently have, you can’t spend more than you make.  Well you can, but it is frowned upon. A bag holding your instrument of trade could be seen as your bank or wallet holding your cash!

Lately, the wallet and bank of mine have been near empty up until February of this year when my wife started working.  She was working probably harder before; she was at home taking care of our two little kiddies.  (Cheeks if you are reading this and have made it this far in the article, I love you, sorry for the shameless plug for my wife)

Here is the modern day definition from Merriam Webster:

a : a statement of the financial position of an administration for a definite period of time based on estimates of expenditures during the period and proposals for financing them

b : a plan for the coordination of resources and expenditures

c : the amount of money that is available for, required for, or assigned to a particular purpose

Taking a few moments out of your hectic routine on a monthly or bimonthly basis can help you find hidden cash flow problems (money you are spending that you may not know that you are spending) and free up some cash to throw at your retirement or any other goals you have.  Budgeting also helps you to set goals and gives you a target to work to.  Working day in and day out can become monotonous as the weeks and months fly by we wonder what we have accomplished looking back.  Well you are in luck, we can use the budget as a tool to show what we have accomplished. 

Setting a family budget doesn’t have to be elaborate or be on a fancy spreadsheet.  Write it on a napkin if you wish, but make sure that you stick to it.  Speaking of that my wife and I need to sit down and straighten out our finances now that we have 3 different cash flows!  

PHOTO BY: darek.zon
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Comments

  1. There’s a lot of talk about budgeting these days in the PF world. Maybe there always is and I just have never noticed before (very possible). My budget is very much used more as “guidelines” more than a “must do”. I should start following it more carefully, though.

    • @ Daisy – I am thinking the same thing. It could be that I got older and wiser too and just started to take notice. Not to sound morbid, I also noticed this with deaths. I hear about it a lot more. Sometimes my randomness gets the best of me.

  2. Over the years, I think I’ve gotten pretty good at budgeting. I think that this was mostly from fear of spending myself into the poor house. My budgeting style still works for me. However, the difference is that I treat it more as a game of wealth enrichment rather than just simply as something I have to do to keep control over my finances.

    • @ Anthony – I like the idea of making it a game. Never really thought of it that way. Good idea. I am going to go back to the drawing board and think about this one. Thanks for the comment.

  3. I am planning to set up
    – an emergency budget (to take care of sudden health issues of my family)
    – set up a business budget (some part of my income must be saved for the purpose of starting a business in future)

    • @ Karunesh – Way to go knowing you have to set one up is a step in the right direction and reading finance blogs should definitely entice you. Once you set one up make sure you keep with it. That is where many fall off the train. What type of business in the future are you looking to start?

  4. I might be weird (OK, not might ;-)), but I like to budget. There’s something inherently enjoyable to me about pulling up those excel spreadsheets and planning how to spend my money. I guess, I’ve always been a planner.

    • @ Kari – ok you are weird 😉 lol jk. If you are organized and have no problem sticking to it then budgeting is fun. It was more fun when I was single and I only had to look at my spending. It will take some time to get my wife on board with this whole budgeting thing. Once on board it will be hard to stay on it. Geez why does it have to be so hard to be fiscally responsible. Do you strictly follow your budget or do you have a section for some slack (other spending)?

  5. I keep my budget pretty simple. I just give myself enough spending money for the week and leave it at that. I do much better when I set saving goals rather than a strict budget. If I say I have a goal to put a hundred in savings this month, then I do it. I like simple budgets.

    • @ Katie – Saving goals when acheived feel like victories rather than just a goal of following your budget. Either way you are saving which is GREAT!!! Keep up the good work and you are on your road to being a millionaire!!

  6. I found your post very helpful. I have linked your post at my website weekly roundup

    • @ Karunesh – Thank you very much for the positive comments. I am glad it helped you. Hopefully you will find more articles useful and learn a thing or two.

  7. I am terrible at sticking to my budget, but I always come up with a monthly budget in Mint.com and monitor it so I at least know where my money is going. I do end up saving more, still, when I budget versus not budgeting at all. It’s easy to check in and realize I completely blew over my shopping budget for the month half way through, and then to avoid the mall and push my hair cut off for another month, to try to balance out the budget and keep my finances in check. I agree that budgeting is the most important thing (next to then investing your savings) when it comes to smart PF.

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