Growing Into It, Not Out of It
Over the years, I've come to understand a universal understanding about budgeting: It's something you do when money is tight, and then eventually grow out of it. It manifests through various comments:
"My kid doesn't make much; they need to budget."
"We make a lot more than we used to, so we stopped budgeting."
"I make plenty of money now, so budgeting is pointless."
I probably hear a variation of this comment at least once per week. To me, it's one of the biggest misunderstandings about budgeting. Actually, I do think income and the need for budgeting are correlated......but the opposite of conventional wisdom. The more money someone makes, the greater the need to budget.
I'll use two examples to illustrate this point:
Family A: This family has a limited income. Finances are tight, and most of their income goes toward needs and debt. When they budget, the primary objective is to ensure there's enough income to meet these basic needs.
Family B: This family has a stout income. Their needs are met, and a bunch of discretionary income remains. They don't "need" to budget.....they are fine. However, without a budget, there's a high likelihood that they squander their opportunity to give, save, invest, and spend on things that add value. Without a budget, their impulses and lack of intentionality will waste much of their upside. But with a budget, the sky's the limit.
Family A has a narrower range of outcomes. During this season of life, money is going to feel tight. The difference between budgeting and not budgeting ranges from barely making ends meet (and possibly accruing credit card debt) to making ends meet with a bit of discretionary income left over.
Family B's range of outcomes is like the Grand Canyon. Without a budget, they can essentially squander all of their upside and somehow manage to live month-to-month, feeling significant financial tension every step of the way (this is common). With a budget, they have the power to harness this beautiful financial blessing for so much good. They can give generously, save for future wants/needs, spend money on things that actually add value, and invest meaningfully and intentionally.
It's sad, but LOTS of Family B's will squander their opportunity. I've had the privilege of working with many of them, and when they understand this principle, it's game over! Here's one example. This family had generated a fantastic income for over a decade. Yet, over that time, they'd experienced minimal positive momentum. They didn't have much saved, they gave practically nothing, and their investment portfolio was significantly behind schedule.
Then came the budget. They pushed back against budgeting because they "make too much to need one." Eventually, though, they trusted me enough to try. Fast forward just a few years, and they were giving away more than 20% of their income, had adequate savings, invested in creating memories, and built a million-dollar portfolio......which triggered a desire to ramp up their giving even more. All because of a simple budget.
Budgets change everything! ESPECIALLY if you "don't need one."
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