Budgeting is a waste of time!. To me, a budget is a list of planned income and expenses. It is a road map to achieve your financial goals. Most people look at a year’s worth of expenses and take an average and /or adjust for inflation and use it for their budget. Is that enough?
Budgeting is a waste of time, if you do not spend the time to really analyze your expenses. Before you create a budget, you should look at each expense to see if you need it. Analyze the expense for alternative choices. Let’s analyze the utility bill. Can you reduce the water consumption? Use water saving devices and techniques such as flow restrictors, low flow toilets, stop running the water, and change lawn watering to be more efficient. You can replace the lights with more efficient compact florescent lights, turn off the lights when you leave a room, fill up the dishwasher and clothes washer and dryer. What else can you do?
Changing your habits can pay off handsomely! Something as simple as using a cold water wash for your laundry and taking shorter showers can cut your hot water usage by a third. Installing a programmable thermostat will reduce you heating and air conditioning costs, if you lower the thermostat for heat in winter and raise it during the summer. During the winter, reduce the temperature during the day when no one is home. You can lower the temperature while you are sleeping and in the evening you can wear a sweater when you are home. During the summer, raise the temperature when you are not home and try to keep it a couple of degrees higher when you are home. Weatherizing your home can pay off very quickly too.
Examine each expense and think about what changes you can make to be more effective. If you spend a lot for transportation, what are your alternatives? Should consider public transportation, carpooling, buying a less expensive car or having only one car ? Can you maintain your car yourself, find a less expensive mechanic, or take advantage of specials? Do you have a car payment? Is it high interest? What alternatives are available? Can you pay it off? Review your automobile insurance! You can increase your deductible, shop other insurance companies and review your coverage for duplication or unnecessary coverage.
Don’t overlook examining your grocery and household purchases. Are you using coupons? Is the supermarket the best source of your groceries? Are there farmer’s markets in your area? Are there other sources you overlook for produce or groceries? Should you buy household items at the supermarket? It is convenient, but not the lowest price? Perhaps purchase household items at Costco, Walmart, or Target once a month. Analyze each item! Do you buy national brands or store brands? This is important for food or household items! Do you buy prepared or packaged food? They are more expensive than buying individual items and raw products. Most store brands are high quality and make excellent household items! Expand this to personal items.
Do you see a trend? What is the use of a budget if you do not make changes to reduce the costs of the things you buy? Here are three questions that will help you decide what to do. Do you need to keep using a particular product or service? Can you find a better choice? Can you find a better alternative? After you complete this exercise, you will be ready to prepare a budget. Do you need a budget? You may want a budget to help you achieve your long range financial goals, but you won’t need a budget. What do you think? Is budgeting is a waste of time?
Photo by: jbcurio