Why budgeting is a good idea
A few years back I was reading Mahatma Gandhi’s biography, “An Autobiography or The Story of my Experiments with Truth” and came across this passage that made me appreciate one more facet of Gandhi’s life.
“I kept account of every farthing I spent, and my expenses were carefully calculated. Every little item such as omnibus fares or postage or a couple of coppers spent on newspapers, would be entered, and the balance struck every evening before going to bed. That habit has stayed with me ever since, and I know that as a result, though I have had to handle public funds amounting to lakhs, I have succeeded in exercising strict economy in their disbursement, and instead of outstanding debts have had invariably a surplus balance in respect of all the movements I have led. Let every youth take a leaf out of my book and make it a point to account for everything that comes into and goes out of his pocket, and like me he is sure to be a gainer in the end.”
Excerpt From: Desai (Translator), Mahadev. “An Autobiography or The Story of my Experiments with Truth.” iBooks. https://itun.es/us/2Qkew.l
I understood Gandhi’s advice at an intellectual level but putting it into practice…well… I am not a Gandhi…let me leave it at that.
To me the word budgeting had a lot of negative connotations.
- Budgeting is restrictive
- Budgeting is hard work
- Budgeting does not work
- Budgeting is not for everyone especially not me.
These negative connotations were slowly being bombarded through various sources. I had a co-worker who was passionate about budgeting. He sent me Excel templates and instructions on how to use them. I read some financial books that put budgeting as the first step. Vicki Robin in her book, “Your Money or Your Life” made a great case for budgeting and not just budgeting but the relationship of money with your life’s energy.
Slowly and surely these negative connotations have all been neutralized and in their place I have some new insights on budgeting.
- Budgeting is about freedom
- Budgeting is about valuing your time and energy
- Budgeting is about prioritizing
- Budgeting is easy
1. Budgeting is about freedom
By setting a limit for spending, I am not restricting myself but giving myself permission to spend that money. I am consciously deciding to spend the money I allocated without any guilt whatsoever. This is freedom.
2. Budgeting is about valuing your time and energy.
Realizing the equation between the money you earn and what it costed you in terms of your time and your energy will make it easy to walk away from that random and mindless purchase.
3. Budgeting is about prioritizing
Knowing what is important vs what is not important to you personally is very critical. Say, you like clothes or travel or eating out or cars and don’t care so much about books or movies or cable or cellphones. If you decide on your #1 priority for spending then you can put a limit on it that can be satisfactory to you. Similarly, you can put a limit on your lower priorities. Anything you save spending on your lower priorities can be added onto your higher priorities which will give you more satisfaction.
4. Budgeting is easy
I have started using Mint which makes it so easy to budget and track your spending. There are similar tools available to track spending but I have liked Mint so far and planning on using it.
Following Gandhi’s advice of tracking expenses daily may be a bit too much but weekly or even monthly tracking of your budget is not a bad idea.
Thanks for reading and have a great day!