{"id":13778,"date":"2022-08-13T12:18:37","date_gmt":"2022-08-13T17:18:37","guid":{"rendered":"https:\/\/www.fitbux.com\/articles\/?p=13778"},"modified":"2024-11-14T16:43:13","modified_gmt":"2024-11-14T22:43:13","slug":"advantages-disadvantages-budgeting","status":"publish","type":"post","link":"https:\/\/www.fitbux.com\/articles\/advantages-disadvantages-budgeting\/","title":{"rendered":"Advantages and Disadvantages of Budgeting"},"content":{"rendered":"

Many money \u2018gurus\u2019 say you need to budget.<\/p>\n

But is it really worth it?\u00a0 I get this question in many of the financial planning webinars I host.\u00a0 The answer is yes… if you budget correctly<\/a>.<\/p>\n

In this article, I\u2019m going to lay out the advantages and disadvantages of budgeting.<\/p>\n

Remember, the goal is to make money complement your life not dictate it.<\/p>\n

Advantages Of Budgeting<\/h2>\n

Budgeting has two primary advantages.<\/p>\n

Advantage #1: Learn Where Your Hard Earned Dollars Are Going<\/h3>\n

Often times I hear young professionals say they don\u2019t have enough money each month.\u00a0 For example, they can’t to do things like pay extra on their student loans or save for retirement.<\/p>\n

When our Coaches<\/a> help our FitBUX<\/a> Members build their budgets, it is common for us to see individuals not being able to account for $1,000 to $2,000 in spending every month. Every. Single. Month!<\/p>\n

Case in point, I spoke to a person earlier this week and they were dumbfounded.\u00a0 They started building their financial plan using FitBUX\u2019s technology<\/a> and literally could not account for $1,150 a month in spending.\u00a0 They know they spend it but they couldn\u2019t figure out where!<\/p>\n

Organizing is the purpose of budgeting and the primary advantage of it.\u00a0 It allows you to get an idea of where your hard earned dollars are going each month, quarter, and year.<\/p>\n

Advantage #2: Understand How You’re Allocating<\/h3>\n

When you budget correctly<\/a>, you can see what percentage of your total income is going where.\u00a0 Therefore, you can easily see where your focus is and where you should focus in the future.\u00a0 Obviously, this is an advantage relative to having a chaos of numbers in your head.<\/p>\n

\"\"<\/a>Disadvantages of Budgeting<\/h2>\n

The disadvantages of budgeting primarily stem from misconceptions regarding what a budget does.\u00a0 I will address those below but I\u2019ll first address the biggest disadvantage of budgeting.<\/p>\n

Disadvantage #1: It Used To Be Time-Consuming<\/h3>\n

In the past, budgeting took a lot of time and effort which is an obvious disadvantage.\u00a0 People used to do it by hand on paper.\u00a0 Then individuals started using Excel and some still do.<\/p>\n

This takes a lot of time. Worse yet, it doesn\u2019t help reduce money-related stress. In short, money is still dictating the individual’s life.<\/p>\n

Nowadays, there is technology that reduces the time and effort to organize your budget. For example, FitBUX\u2019s technology<\/a> allows you to build and track your expenses in a matter of minutes.<\/p>\n

Therefore, if you are stressed about budgeting or spending a lot of time on it, technology can address this.<\/p>\n

Disadvantage #2: Budgeting Is Misunderstood<\/h3>\n

There are a lot of misconceptions about budgeting which, it turn, make budgeting sub-optimal. I explain each below:<\/p>\n

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  1. Some believe that budgeting gives you control of where you spend your dollars.\u00a0 No budgeting doesn\u2019t do that.\u00a0 If you didn\u2019t have control prior to budgeting, you aren\u2019t going to have it after.\u00a0 All budgeting does is show you were you are overspending.<\/strong> That is why close to 80% of people with a budget don\u2019t follow it.\u00a0 This is a behavior issue.\u00a0 I highly suggest trying my 40 day and 40 night technique to develop good behaviors.\u00a0 If you want to learn more about this technique, download the podcast below.