Up until two years ago, we had one or two great incomes and didn't budget at all. We saved moderately, paid cash for our homes and cars, and were doing well. But we could’ve done better. Our retirement could have an extra $100,000 in it if we managed our spending better.
Then we divorced and the wealth we thought we had went towards buying my home and was divided between us. I freaked out. I had no idea where my money was being spent or how much I was spending. I had a new job with commission-based, inconsistent income. I had to pay for childcare, health insurance out of pocket, property taxes, and the list goes on. I knew that if I wanted to save properly, like I’d been taught to do, I needed to manage my spending well.
Why budget if you are finically sound?
If we had budgeted during our prime income a few years ago, our wealth would be so much higher and accumulating more growth. Instead, we spent as we pleased. Sure, our budgets can vary but giving ourselves goals for spending and saving keeps us in-check and causes us to think twice before spending. The goal is to pay off debt and save as young as you can so that later in life, you’re adding to your wealth. Since I started budgeting 6 months ago, I have seen amazing results and my frivolous spending has cut back 80%!
You never know...
The future is unpredictable. Even if you’re flying high right now without debt and with a stable income, an unexpected illness or catastrophic event could be crippling if you haven’t planned for it. A loss of income, even for one month, would put most American’s into debt. I encourage you to have some cash accessible in case a catastrophe happens and you can’t access what’s in the bank. I encourage you to have at MINIMUM, $1000 in the bank (save up for this if you aren't there yet). Then work on wiping out your debt and so on. The Baby Steps are a tremendous resource and there is so much free info online to help.
Moral of the story: Even if you think you’re doing great financially, there is always room to improve and be more conscious of your spending. We get used to swiping our card and even if we can afford to pay it off every month, doesn’t mean we couldn’t be doing better! Most of the wealthiest people I know are driving modest vehicles, don’t live in mansions, and you would never know they have a massive nest egg!
The views expressed here are my own. This is not meant to be professional financial or investment advice but to share and inspire based off my own experiences.