3 Reasons Why Budgeting Doesn't Mean Savings

Accounting for expenses and income, budget planning is not even number one, but number zero for those who want to put their finances in order. This is the main advice for those who want to save and make savings. And Lifehacker is no exception here, we also recommend it.

Budgeting really helps to save and / or increase savings. But not by itself. And that's why.

1. You can't save if you don't have a goal to save

A budget is just a chronicle of the movement of money, maintaining it is a tool that allows you to manage finances. With it, you can understand where the earnings go and plan expenses.

By itself, budgeting does not mean that extra money will automatically appear. Mistake many people make: start record expenses and then just randomly cut them down. As a result, life becomes difficult and joyless, because some things that really brought happiness disappear from it. After a while, a person, as a rule, decides that it is pointless to keep a budget. Millions did not appear on the accounts, but it’s already bad now.

In order to start saving smartly and with less losses, you need to monitor expenses for some time in the form in which you are used to them. Not a day or a week, but for several months. And then analyze the spending and draw conclusions.

The budget is a springboard from which it can be easier to jump to the savings step than out of the blue. But without additional actions, by itself, it does not guarantee anything. Need a goal savings and the ability to spend less. About the second next paragraph.

2. Budgeting does not increase revenue

The idea that everyone can save and save money if they start budgeting is too idealistic. Because it's really not at any income. Sometimes a person earns just enough to provide for their basic needs. If he can afford to spend more and at least on some joys, that's good. And you can not demand that he refuse this for the sake of economy. Because focusing on distant goals is great, but you need to live now.

Budgeting does not magically increase income. If money back to back, then can't save. However, this does not mean that the budget is completely useless at low incomes. It will help to plan, streamline spending, and a person will at least understand what he will be able to cover his needs next month and six months later, and this may reduce the level stress.

3. Budgeting is not necessarily about saving

Sometimes the planning of financial flows implies an increase in costs. Take a growing company. She can earn a small income. But to make a profit, she needs to invest. It can be the development of technology, hiring employees, and so on.

A personal budget is also not necessarily about saving. Suppose a person analyzed it and realized what he needed increase income. This may result in additional training costs.

In itself, planning costs can increase them. For example, a person will not forget to pay a monthly utility bill, pay off debts, or do something else that is obligatory, which previously fell out of memory.

“Budgeting” is not the same as “saving”. You start saving money when you work on it with precision. It is important not to confuse these two tools in order to succeed.