Budgeting For The Right Things, Not All The Things

Budgeting is a continual push here at Finance Free Life. I reference it is most of the posts because it is the foundation of being able to manage your money. It has saved countless people from continuing the dreaded debt problems. However, there is often the same question I hear about budgeting, which is should you budget for everything? Now, the context has typically been regarding things people want not necessarily things they need. So, I wanted to address it here.

The Want and The Need

This is not rocket science when budgeting your money. You first need to cover the essentials, and then you can move to more appropriate luxury items (wants). Obviously we all have our own perspective on what wants and needs are. However, generally speaking, if you can last more than six months without it and be okay, it is probably more of a want. For example, I could last more than six months or more without Starbucks. However, I cannot last more than even a few weeks without my prescriptions. The breakout is easy to understand.

Making The Budget For The Wants

Budgeting for the things we want on a regular basis should be done, in my opinion, AFTER you have paid off all consumer debt. You should not be budgeting for $100 in Starbucks every month when you still have thousands of dollars in credit card debt. Once you have worked to achieve a level of financial freedom, you should be able to indulge a bit while keeping focused on investing and paying off your mortgage (if you have one).

The Caveat To Budgeting For Your Wants

There is always a catch with everything. In the case of budgeting for the monthly things we want, there needs to be a sanity check. This sanity check is unique to each person. Consider if what you are budgeting for, although a want, is harmful to you in any way (i.e. alcohol, casinos, fast food, etc)? Could budgeting for this put me in a bad spot financially, physically, or emotionally later on? Is there a chance having this added to the budget will get out of hand and result reverting back  at all before financial freedom? These are just a few of questions you can ask yourself. Ultimately you want to be sure you are not going to hurt yourself by making this adjustment.

My Example

My example of this is simple. I have wanted to get braces again for awhile to fix the movement my teeth have seen since I had braces in high school. The best alternative for this was through the Smile brand, since they were so cheap. I went through the similar checklist to see if it was going to be a problem with having these as a monthly bill for the next 12 months ($80/month). We were already budgeting for medical bills, so we simply adjusted more towards this bucket to make it work. There was no downside to the questions, except for the pain I was going to have to deal with through the process. Not all of the decisions are going to be this easy for everyone, but you can get a sense of what I am trying to show to you all.