Everyone seems to be talking about budgets now. First there’s the big Malaysian Budget 2010. At work we have to prepare our department budget for next year.
I don’t plan on preparing a personal budget for 2010. I’ve thrown my personal budget out the window.
Not literally of course. My budget is on a spreadsheet. I can’t throw it anywhere. But I’ve stopped trying to track down where every single sen went.
The personal budget was a terrible influence on my life. Felt like I installed a software into my brain that had trojans in it. It did achieve its objective: to see where my money was going. But at what cost?
I had to spend time updating expenses to the various spreadsheets and budget software. I had to crack my head trying to remember what I spent money on (and when I can’t remember I would bug my wife to remember for me).
Then I had to ensure that the numbers matched the actual money I had in my various accounts. Picture me at midnight counting my few pieces of dollars and coins, and then trying to figure out why I was short of RM2.40.
It became a tedious chore for me right from the start.
I became very calculative and stingy. My wife could not stand it. Even my mother could not stand it. Relationships suffered. Arguments over money erupted over a few ringgit.
I became a scrooge. Don’t picture the rich Scrooge McDuck. Picture a man buried still clutching his money with his cold lifeless hands.
I contemplated gathering rain water to flush my toilets. I turned off the lights to save on the power bill and used candles instead.
I bought only one packet of food to share with my wife instead of having one each. I didn’t cut my hair for 3 months.
One day I was sitting there updating my spreadsheets and juggling all the receipts flying around, trying yet again to account for some missing money. I just gave up.
I left my budget in cold storage and have not logged in to my budget software since then.
Not having to track every sen feels liberating. I feel lighter, happier and less grouchy. I think my family enjoyed being around me a bit more.
No more arguments over money have come up since. I think if I continued down the scrooge path, my wife would leave me.
I started to open my eyes and my mind. Life wasn’t just about accumulating wealth or controlling expenses. There were things which were equally important.
Money isn’t something you hoard, it’s something you can also use to have a good time.
After all, there were always new things coming up that were not in the budget. Things needed to be repaired. Weddings and birthdays came up.
Still In Control
While I don’t have a a personal budget, it doesn’t mean that I’m spending indiscriminately.
I’m still in control of my finances from a high level.
Instead of a budget, I now live by a spending plan.
I know how much I need to save and invest every month. I know the maximum amount I can spend each week.
The only thing that has changed is, I don’t care about the details.
How I Do It
Even though I’ve abandoned my budget, I still had some basic information to fall back on.
I guess preparing the budget in the first place help me to gather all this information.
I know exactly how much I need each month to pay all the bills. I know how much I need to save each month to achieve my future goals.
I set aside a certain amount of cash each month, and I give myself a weekly allowance.
These can probably be reviewed once every year as income and expenses change.
I still monitor my credit card and bank balances every few weeks to make sure everything is in order.
A budget is just one of the tools that we use to manage personal finance.
I do realize that budgets help many people, including even you.
Countries and companies need budgets because they are held accountable for every sen.
If you’re new to managing your personal finance, budgets may even be the best place for you to start, to see where you stand (or sink).
I think a budget is best used for planning purposes. Use it to allocate your money. Use it to see how you are overspending.
But I would advice you not to restrict your life and quality of life to a budget. Don’t let it imprison you. Be creative to find ways around a budget.
Life is too unpredictable. You never know what will happen tomorrow.
What do you think? Should I get back to my budget? Or was I just doing it wrong from the start? Have you found budgets useful? How do you faithfully keep following your budget?