Hard work and budgeting is not the key to saving money. There are better methods. However, this is what we’re taught in most financial courses and through media consumption. Sure, working hard and saving that hard-earned money is the right idea, but what is all of that hard work worth on a a budget that yields very little in savings? The budget itself needs to have actual value.
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“Is your budget plan worth the hard work of budgeting?”
The greater the amount a budget yields in savings, the greater value it possesses. Additionally, the amount of its yield must be taken into account along with the time required to yield such an amount. A budget that yields $20,000.00 in savings sounds great until we find out that the amount is per ten years.
Financial courses spend very little time exploring the basis for needing to budget in the first place. The standard premises are:
P1: Bills are owed.
P2: Funds are regularly limited.
The investigation typically begins after this point and fails to explore the source of the problem. Indeed, the problem starts with both premises. Why do you owe bills? Why do you have limited funds? A different question of honorable mention is: “Why do you need funds, a.k.a. ‘currency?'”
Logically solving either one of these premises would have a profound effect on ones finances and would remove the need for budgeting. If no bills are owed in the first place, is budgeting necessary? If funds are unlimited, is budgeting necessary? I’ll admit, completely negating both premises isn’t that pragmatic in today’s resource-monopolized, currency-driven world, but what is realistic is either reducing the amount in bills owed or increasing the amount of funds regularly accessible.
So why do you owe so much in bills compared to available funds? Instead of tackling the actual problem head on, we’re all taught to take the least logical path and “budget.” Calling it the least logical is an understatement as the need to budget is an emergent problem of existing problems–namely, the problem of bills and the problem of currency. So budgeting could not possibly hope to solve an already broken equation. Why must one pay another for basic resources? Why must one trade currency in the first place in order to accomplish this? What does one do about the forces of inflation and deflation that shape the value of the currency, affecting your ability to budget as a consequence?
Budgeting plans complacently accept the premises of bills owed and limited funds as non-problems and attempt to exact balance onto an already imbalanced dynamic. Rather than focusing on the problem of bills and the problem of limited funds, budgeting is the skill of salvaging more and more out of less and less. But this technique has practical limits.
Over time, we’ve seen the cost of living sky-rocket. We’ve seen the dollar lose value. We’ve seen the government raise minimum wage requirements several times. At the same time, we’ve seen the same government raise income taxes. As the type of budgeting we’re taught to do today is not an actual solution for true financial harmony, it slowly exacerbates a potentially large problem over periods of time. Eminently, we end up having to learn how to budget more skillfully year by year, and how make due with less and less. The end result is a low quality of life. You’re now working longer days and longer nights. Eventually you reach a point where the minimum quality of life needed for yourself and maybe your family included isn’t sustainable, bearable or even within your control.
There are real examples of this type of problem going on. Simply buying healthy food is a problem, because lower-class families can’t fit healthy groceries into their budget. Having a hard time affording household air-conditioning during the summer in southern California and suffering from profuse sweat in attempt to budget is a real problem as the utility companies there charge the highest rates nationwide with exceptionally high rates in the summer. There is nothing wrong with living on a budget, but the goal should be to reduce the need to budget, which starts with resolving the core problems.
I figured out a few years ago that a minimum wage income with extreme budgeting wasn’t worth the savings it yielded in the long-run. I may have worked hard, but was all of that hard work worth the yield of $200-$300 per month in savings? Every single tire blow-out or medical emergency is just waiting to set most people back. Later when I began to move up in life and increase my income, I was shocked to see that I was saving $1,000.00+ per month with just $15.00 an hour–three times per month what I could have managed to save previously. And this is probably just an upper-lower class income. We must realize that this per month amount multiples every month. In just three months, we’re talking about the difference between $3,000.00 and, at best, $900.00. So, in a year’s time, we’re talking about the difference between $12,000.00 and, at best, $3,000.00. Suddenly, my ability to respond to emergency financial situations and to invest in business pursuits and other items increased exponentially. My spending habits had not changed, and it’s not as if I started working harder. I realized that I was able to save more money by making more money. And I was able to accomplish this decades ahead of schedule compared to a budget on my prior income. I was able to start getting ahead in life earlier rather than way later. Trying to squeeze more savings out of a budget with very poor yield is a poor long-term goal. In my opinion, as an adult, if a budget doesn’t comfortably yield at least $500.00 in savings per month, it is unfairly over-working you and stealing many hours away from your lifetime that you will never get back. More money is definitely a solution to saving more money, but if an individual increases the amount due in bills as their income increases, the net positive change is inhibited. Vice versa, little money with reduced bill amounts is a solution. Most of us would find saving money very easy if we didn’t have so many bills.
Thus, one must strike an excellent balance between the two to create an excellent yield in savings, while also taking into account the time required to yield such an amount.