Why Budgets Work

Some visitors to Pagemonth.com are interested in our home budget spreadsheet--but only some.  Most are interested in finding advice on home budgeting itself, especially how much they should budget for food, clothing, shelter, transportation, savings, emergencies, repairs and maintainance, and so on.  It is the single most asked question everyone wants advice on.

I found evidence of this in designing our budget and our website support pages at Pagemonth.com.  By far the most visited page after our homepage has been Budgeting 101, where we chart out basic percentages of net income many experts recommend spending on those broad categories for an average home budget.

It astonished me to find that very few were interested in our pages on assistance setting up or using the spreadsheet itself, or the FAQ's we used to answer users' questions and concerns, or our contact page, or even our blog, compared to the interest in "How much should I budget for ____?" fill in the blank.

And it got me thinking, why is it that budgeting works in the first place?  It has to be more than just recording income, expenses and charges on a regular basis.  Those are the actual numbers, and no doubt they act on our psyches to confirm our suspicions and perhaps goad us to try to cut back in some things or try to earn more income, use our credit cards less frequently, or otherwise keep them in mind.

But then I realized, no, that's not really what makes budgets work.  It's not what has happened in the past.  It's what could happen in the future unless we make adjustments.  In other words, budgets work mainly because they force us to look ahead.  Unlike our checkbooks and bank statements, home budgets project a future scenario of getting and spending we think could happen, and what the future needs could do to our future balance through the remainder of the year.

And it's pretty strong motivation if we see projected balances we can't live with.  It makes us think twice before getting things we really don't need or settling for an income we can't comfortably live on. 

But it also gives us the motivation we need to adjust our getting and spending to project future balances we can live with, even thrive on--to set up an end-of-December balance that leads like a beacon in the darkness.

Admittedly, actual experience numbers show us that unpredictable expenses are going to happen sometimes that knock our budgets way off, so we try to build in buffers within our budgets to handle them.  Sometimes, also, we catch a break and get some unexpected money as well, but we can't count on it.  Our budget plans have to project realistically, and one can't count on surprises.

So budgets work because they extend our view, reminding us of how we got to our present situation and showing a future we may be in, a telescopic view if you will, while we are still in the present, with time to adjust for it.