Is a budget really necessary?
I have been out on my own with full-time job now for about 6 years and during this time I have never made a budget. I got married in 2003, bought a house in 2004, and yet I have never ever found the need to create a budget. I even find tracking my expenses in Quicken to be too much of a hassle and I have never made it more than 2 or 3 months in a row before I give up entirely on the process.
I guess my question is, if you have the right mentality about spending then why do you need a budget? In other words if you are only going to purchase the things you really need to start with why do you have to go through the trouble of coming up with a budget in the first place. On top of that every formal budget I have ever seen in both the corporate and personal world becomes pretty much outdated the second it is created. Because you don’t know what’s going to happen 1 week from now, much less 9 months from now, how can you truly plan your expenses? If something pops up (IE car breaks down, you get speeding ticket, hospital emergency, etc.) you are going to spend the money anyway regardless of what your budget says.
To me a budget is more about spending money than not spending money. While it may in some instances curb a spending decision (very unlikely IMHO) it may actually encourage spending if you haven’t used up your monthly allotment of dining or latte budget. To me this would be the only useful thing of a budget is to force me to spend money in areas where I have a hard time forcing myself to to indulge in (Vacations, eating out, stupid non-essential fun purchases).
I’m sure there certainly are benefits to budgeting as some people would be truly lost without their budget and budgeting has turned around a lot of people financially, but to me it’s not the budget that is important it’s the mentality that goes along with budgeting, basically that you have limited resources and you should use those resources wisely. I think if you just understand that concept you will be ok.
Disclaimer – I’m sure that I would be a fool to say I don’t budget in one way or another as just from this site you can see I’ve “budgeted” how much I need to save for retirement each year for the next 3 years, but I guess as far as controlling expenditures via a budget I don’t think having a budget is necessary if you are in the right frame of mind.