We hear it time and time again–if you want to get ahead on your finances, you need a budget, and you need to stick to it. While modern technology has made it much easier to plan and track spending, worrying about our budget every month can start to feel like the dollars run our lives. Knowing where our money is going is important. It’s simply impossible to know if we’re making progress towards our goals without that knowledge. However, it’s not so much the amount being spent that matters, but whether or not the spending is bringing value to our lives.

Track Spending
There are a number of apps these days that can seamlessly accomplish this task. You simply link your bank and/or credit card accounts, and the software collects the information for you. Or, simply busting out the old Excel spreadsheet and manually entering what we’re spending money on each month works as well. Regardless of the method, this is a task that anyone seeking control of their finances should engage in. Knowing where your money is going is the first step towards taking the reins of your financial future. Not only does it give you a bird’s eye view of how cash is flowing in and out of your life, it provides insight on how much of your paycheck is reasonably available after expenses to fund any goals.

Then, Evaluate Spending
The most useful part of tracking spending, is having the ability to then analyze it. This is where having a “budget” really makes a difference. When we look at spending under the microscope, we get to determine if we like what we see. More often than not, we’ll find at least one area of spending in the beginning that gives us a little shock. Eating out and entertainment are common culprits. But maybe it’s something more rudimentary, like the cost of car ownership. It’s easy to forget that commuting to work comes not only with the cost of gas, but also car payments, insurance, maintenance and depreciation–not to mention the time it involves. However, maybe you enjoy the alone time on the commute, enjoy driving, or like using the time to listen to audiobooks. I personally enjoy nice beers more than some might consider economically justified. But I also feel that consuming them brings me a level of enjoyment that exceeds what saving the money instead would provide. Whatever the case may be, it’s important to ask yourself if each purchase brings an equal value to your life. This is the surefire way to use a budget to begin weeding out the expenses in your life that don’t bring enjoyment, and instead diverting those funds toward building the life you desire.   

The true value of having a budget is not in controlling how much you spend, but in how you spend.

Having a budget to simply constrain yourself, in turn feeling guilty about spending, undermines its purpose: becoming empowered by having control over your money. If spending extra–reasonably and within your income of course–on the lifestyle you genuinely want  boosts your quality of life, it may simply be worth it. The maximum enjoyment of life isn’t promised to those squirreling away every last dollar. At the end of the day, money exists to be spent. It’s up to each of us to figure out how it is best spent.