Many Americans Confused About the Purpose of Budgeting

A recent survey from the National Foundation for Credit Counseling revealed a surprising misconception that may explain why so few consumers take time to create a budget. More than half of survey respondents – 57% - considered a budget to be a restriction on their spending. Less than half – 43% - said a budget gives them the freedom to spending money as they’ve chosen. Of course, the latter is most accurate.

Another poll conducted by Gallup revealed that more than two-thirds of Americans aren’t don’t budget every month. Perhaps the misconception about the purpose of budgeting is the blame for the widespread failure to budget.

The NFCC gives several good reasons for creating a budget, some of them include:

• to relieve financial stress,
• to plan for large purchases,
• to find hidden money for debt repayment,
• to assist in meeting financial goals, and
• to free up money for savings.

The good thing about a budget is that you create it, so any restrictions you feel with your budget are self-imposed. And since you control your budget, you can make it as restrictive as you’d like. Of course, the less restrictive you feel about your budget the more likely you are to follow it. While you should use your budget to make ends meet and to work toward important financial goals, you can also budget for “fun” spending like movies and eating out. Just keep it in moderation and don’t let your “fun” spending interfere with your necessary spending.

If you need help getting started, the NFCC’s website, found at www.nfcc.org, has an interactive budgeting worksheet that creates a customized budget based on financial details that you enter.

Since you’re the owner of your budget, you have the freedom to change it if it’s not working for you. Increase or decrease your spending in various categories as you see fit. The primary goal of budgeting is to give yourself a plan for spending so you’re not just spending your money haphazardly.

Source: National Foundation for Credit Counseling