For this week's term of the week, we discuss the "b" word....budgeting. It's basically kryptonite for millennials.
Budgeting gets a bad rap because millennials are beaten over the head with the idea that budgeting is how they learn how to curb their spending. Which in itself makes you automatically think of the financial equivalent of being handcuffed. You want to buy a Kit-Kat (do people still eat those?) at the gas station? Well, it's not in the budget so you can't have it.
It also has a poor rep for only being useful when you have money to budget or have a consistent income. Believing in this falsehood is just asking to pile on more debt than you already have. Mainly because you don't know how much it takes to "qualify" to build a budget. Is it $30,000, $75,000, or $100,000? Our answer: all of them. You should always have a working budget, no matter what your income is. Otherwise, while you're living above your means, you're unknowingly putting yourself in a worse financial position year after year. Designing a solid budget that matches your financial goals is how people with incomes below six figures can save millions. The lack of a budget is how households who make over $250,000 can still live paycheck to paycheck.
Budgeting is for everyone. Rich and poor. Young and old. It's time we change how we view budgeting. Here is OUR definition of budgeting.
Budgeting is the process of laying out your cash inflows and outflows and monitoring them to ensure that they are in alignment with your financial goals. That is all, not that scary anymore huh?
Look at budgeting as a way to tell you what you CAN have, not what you can't. It isn't there to slap your hand away from the cookie jar, it's there to allow you to buy the cookie jar without feeling an ounce of guilt.