Dear Dave,
I made a resolution to start following your plan in 2021. I talked to my parents about this, and while they like some parts of your teaching, they don’t think living on a budget is necessary if you make good money. They also said budgeting is extremely difficult. Are they right?
Jensen
Dear Jensen,
For whatever reason, I’m afraid your parents are way off base on this one. A lot of people trash talk the idea of
budgeting, and make up all kinds of excuses for not living on one. The truth is a written, monthly budget is essential when it comes to beating debt and winning with money—period. It’s the map you need to get where you want to go in your financial journey.
There are lots of myths, and just some bad information, out there where living on a budget is concerned. Making a budget isn’t rocket science. If you can do basic math, you can create a budget. Your income minus your outgo needs to equal zero. That’s it! You might spend a couple of hours tallying all your expenses when you first start, but the process soon becomes faster and easier. All it takes is a little practice.
If you think doing a budget is only for people who have trouble
making ends meet, think again. My wife and I have lived by a written, monthly budget every single month for about 30 years. It doesn’t matter whether you’re a multi-millionaire, or if you have just $100 to your name, knowing exactly how much money you have—and where it’s going—is an essential part of managing your finances accurately and successfully.
Believe me, I hear dozens of other excuses, too. You’d be amazed at how many people don’t make a budget every month because they think it’s “boring.” Others claim they can do their budgets in their heads. I don’t think so! For a budget to really work, it needs to be something you can track down to the last penny. And if you’re married and saying you can do a monthly budget in your head, that means only one of you is involved in the decision making. That’s a recipe for disaster in your finances and your
relationship.
A budget represents your financial game plan for the upcoming month and years ahead. As Benjamin Franklin said, “If you fail to plan, you are planning to fail.”
—Dave
Dave Ramsey is CEO of Ramsey Solutions, host of The Dave Ramsey Show, and a best-selling author, including “The Total Money Makeover.” Follow Dave at DaveRamsey.com and on Twitter @DaveRamsey.
