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8 Painful Consequences Of Not Budgeting

By   Zach Buchenau

Last Updated:  May 25, 2020

Have you ever considered the consequences of not budgeting? If not, now is the time.

When it comes to personal finance, there are a number of negative outcomes that can come from operating without a budget. And, the longer you take to implement a budget, the more painful these consequences can become. So, what are the consequences of not budgeting?

In short, the most common consequences of not budgeting include a lack of savings, less financial security, out of control spending, a higher likelihood of going into debt, and more financial stress. In addition, when you live without a budget, it becomes more difficult to navigate unexpected expenses, and achieve your financial goals.

And, if that wasn’t enough to get you to create your first budget, in this article, I am going to cover 8 painful consequences of not budgeting. So, if you are on the fence about this whole thing, I highly encourage you to keep reading.

1. More Difficult To Achieve Your Financial Goals

One of the most important things you can do if you want to achieve your financial goals, is create a plan of attack. Beyond that, you need a way to keep track of your progress, so that you can course-correct if you start to drift off-track. And that’s exactly what a budget does for you.

For example, if you set a goal to save a $25,000 emergency fund over the course of a year, then that means you need to save $2,083.33 every month. With a budget, you can easily plan your spending and cut expenses in order to achieve that goal. On top of that, if you continually track your expenses, you will be able to identify when your spending is drifting off course, and what you need to do to fix it.

All of these things make achieving your financial goals a much clearer and defined process. And when you choose not to live by a budget, you miss out on all these benefits.

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2. Lack Of Savings

When you don’t know your exact monthly income, or your total monthly expenses, it’s much more difficult to save money. Why? Because without a budget, the amount of money you save each month depends on how much you spend. And while that might seem logical, it is a bad way to operate your financial life.

Instead, your spending habits should be based on how much you decide to save each month.

For example, if you make $5,000 per month, and you want to save $2,000 of that, then all you need to do is figure out how to live off of $3,000 per month. And that’s where your budget shines.

The best part about operating your finances like this, is that you can save your desired amount the moment you receive your paycheck, and without worrying that you are over-saving. This is often called the ‘pay yourself first’ method of personal finance, and it is the best way to build savings because it places a higher priority on saving than spending. But, it requires a budget.

3. Less Financial Control

Before I committed to budgeting, I operated my finances using ballpark numbers. In other words, I had a general idea of my monthly expenses, but if you pressed me, I couldn’t give you an exact number. It was a lazy way to manage my finances, and it didn’t lead to good things.

So, when I tell you that one of the consequences of not budgeting is a lack of financial control, I am speaking from experience.

It wasn’t until I started budgeting that I finally felt like I had complete control over my financial life.

Now, when my wife and I make any sort of income, or spend any money, we immediately plug it into our budget. So, at any one time, we can log into our budget and know exactly where our financial situation stands.

4. It’s Too Easy To Overspend

Budgeting creates boundaries within your financial life. When you budget properly, it’s easy to know how much money you can realistically spend on food, housing, automotive expenses, and just about anything else, while still staying on track to meet your financial goals.

On the other hand, living without a budget, removes most of the boundaries that keep your financial behavior in check. And when that happens, it becomes a lot easier to blow through your money and end up broke.

5. More Debt

When you live on a budget, one thing becomes abundantly clear: debt sucks. I can tell you from personal experience that when you have to subtract a bunch of debt payments from your total income every month, it’s easy to develop an allergic reaction to the idea of taking on more debt.

But here’s the thing, when you don’t live on a budget, you lose the constant reminder of how harmful debt is on your financial life, which makes you more likely to go into more debt. And the more debt you take on, the more you reduce your net worth. It’s a vicious cycle, and by the time you start to feel the negative impact of debt, you are in a financial hole that will take years to climb out of.

Having been through the process of getting out of debt, myself, I can tell you that it is a financial consequence worth avoiding at all costs. The good news is, budgeting is the best way to avoid it.

6. Harder To Navigate Unexpected Expenses

One of the hardest financial obstacles to overcome is unexpected expenses. One moment you feel like your finances are completely in control, and the next moment your car breaks down and you have to pay for a new transmission. It’s in moments like this, that you will really feel the consequences of not budgeting.

You see, without a budget, it is much harder to manage the financial repercussions that an unexpected expense can have on your life. It could end up causing you to miss bill payments, or even go into debt in order to make ends meet.

Meanwhile, if you just take the time to budget and prepare for unexpected expenses, you can drastically reduce the impact they have on your life.

7. Less Financial Contentment

When you don’t live on a budget, it’s easy to lose focus on your own financial goals, and instead, find yourself comparing your life to others.

The unintended consequence of this, is that it leads to negative financial behaviors like spending beyond your means, and taking on debt to purchase things you can’t afford. Instead of trying to improve your financial situation, you end up trying to keep up with others that have a bigger house, or nicer car than you.

It’s toxic. But the good news is that budgeting can help prevent it.

8. More Stress

I think the overarching consequence of not budgeting is an increase in stress. Think about it. Whether you’re unprepared for unexpected expenses, you feel like you’ve lost financial control, you spend beyond your means, you’re buried in debt, and you’re unfulfilled with your financial life, it’s stressful.

So, why not get on a budget and prevent all those things? In my opinion, the consequences of not budgeting just aren’t worth the risk.

Zach Buchenau

About The Author:

Zach Buchenau is a self-proclaimed personal finance nerd. When he isn't writing about budgeting, getting out of debt, making extra money, and living a frugal life, you can find him building furniture, fly fishing, or developing websites. He is the co-founder of BeTheBudget, and Chipotle's most loyal customer.

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Home — Essay Samples — Economics — Income and Profit — Budgeting

Essays on Budgeting

Budgeting is an essential skill that can help you manage your finances and achieve your financial goals. That's why we're here to help you with all things budgeting, from essay topics to examples and more!

When it comes to writing an essay about budgeting, it's important to choose a topic that you're passionate about. Whether you want to write an argumentative essay, cause and effect essay, opinion essay, or informative essay, there are plenty of budgeting topics to choose from. From the importance of budgeting to the impact of budgeting on personal finance, the possibilities are endless.

In an argumentative essay about budgeting, you'll want to present a strong thesis statement and provide evidence to support your argument. Some potential topics include the benefits of budgeting, the impact of budgeting on financial stability, and the role of budgeting in achieving financial goals.

If you're interested in writing a cause and effect essay about budgeting, you could explore topics such as the reasons why people struggle with budgeting, the consequences of not budgeting effectively, and the impact of budgeting on personal financial success.

For an opinion essay about budgeting, you can share your personal perspective on topics like the best budgeting strategies, the challenges of budgeting, and the importance of teaching budgeting skills in schools.

Lastly, an informative essay about budgeting can provide valuable information on topics such as budgeting basics, budgeting tools and resources, and the relationship between budgeting and financial wellness.

To give you a better idea of what a budgeting essay looks like, here are some examples of thesis statements: "Effective budgeting is the key to financial freedom," "Budgeting helps individuals take control of their finances," "Budgeting is essential for achieving long-term financial goals," "The impact of budgeting on personal finance is significant," and "Budgeting is a skill that everyone should learn."

When it comes to writing an for a budgeting essay, consider starting with a hook to grab the reader's attention. For example, you could begin with a startling statistic about the number of people who struggle with budgeting or a personal anecdote about the impact of budgeting on your own life.

In the of a budgeting essay, you'll want to summarize your main points and leave the reader with a strong impression. Consider reiterating the importance of budgeting and offering some practical tips for incorporating budgeting into everyday life.

In , budgeting is a topic that is both important and relevant to everyone. Whether you're writing an argumentative essay, cause and effect essay, opinion essay, or informative essay, there are plenty of topics to explore. With the right approach and a little creativity, you can craft a compelling essay that highlights the significance of budgeting in personal finance.

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5 Common Budgeting Mistakes College Students Make and How to Avoid Them

Managing finances is a crucial skill that every college student should master. However, many students struggle with budgeting and end up making several common mistakes. These mistakes can lead to financial stress, debt, and poor financial habits. This essay will explore the common budgeting mistakes made by college students, the importance of budgeting, and how students can avoid these mistakes and improve their budgeting skills.

<h2 style="font-weight: bold; margin: 12px 0;">What are the common budgeting mistakes made by college students?</h2>College students often make several budgeting mistakes due to a lack of financial literacy and experience. The first common mistake is not having a budget at all. Many students do not realize the importance of budgeting and end up spending their money without any plan. The second mistake is not accounting for all expenses. Students often overlook small expenses, which can add up over time and cause a significant dent in their budget. The third mistake is not saving for emergencies. Unexpected expenses can arise at any time, and without a safety net, students can find themselves in financial trouble. The fourth mistake is overspending on non-essential items. College life comes with many temptations, and students often spend money on things they do not need. The fifth mistake is not considering the future. Many students do not think about their financial future and fail to save or invest their money.

<h2 style="font-weight: bold; margin: 12px 0;">How can college students avoid budgeting mistakes?</h2>Avoiding budgeting mistakes requires discipline, planning, and a good understanding of personal finance. Firstly, students should create a budget that accounts for all their income and expenses. This will help them understand where their money is going and how they can manage it better. Secondly, students should track their expenses regularly to ensure they are sticking to their budget. Thirdly, students should start saving for emergencies. Even a small amount saved every month can add up over time and provide a safety net in case of unexpected expenses. Fourthly, students should learn to differentiate between needs and wants and avoid overspending on non-essential items. Lastly, students should start thinking about their financial future and consider saving or investing their money.

<h2 style="font-weight: bold; margin: 12px 0;">Why is budgeting important for college students?</h2>Budgeting is crucial for college students for several reasons. Firstly, it helps students manage their money effectively and avoid overspending. Secondly, it allows students to plan for their future and save for emergencies. Thirdly, it teaches students financial responsibility and prepares them for life after college. Lastly, it reduces financial stress and allows students to focus on their studies without worrying about money.

<h2 style="font-weight: bold; margin: 12px 0;">What are the consequences of poor budgeting for college students?</h2>Poor budgeting can have several negative consequences for college students. Firstly, it can lead to financial stress and anxiety, which can affect their academic performance and overall well-being. Secondly, it can result in debt, which can have long-term implications for their financial future. Thirdly, it can lead to poor financial habits, which can be hard to break in the future. Lastly, it can prevent students from achieving their financial goals and living a comfortable life after college.

<h2 style="font-weight: bold; margin: 12px 0;">How can college students improve their budgeting skills?</h2>Improving budgeting skills requires practice and education. Firstly, students should educate themselves about personal finance. There are many resources available online and in books that can help students understand the basics of budgeting. Secondly, students should start practicing budgeting as soon as possible. The more they practice, the better they will get at managing their money. Thirdly, students should seek advice from financial advisors or experienced individuals. They can provide valuable insights and tips on how to budget effectively. Lastly, students should use budgeting tools and apps to make the process easier and more efficient.

In conclusion, budgeting is a vital skill that can help college students manage their money effectively, avoid financial stress, and prepare for their financial future. By avoiding common budgeting mistakes and improving their budgeting skills, students can achieve their financial goals and enjoy a comfortable life during and after college. Therefore, it is essential for students to educate themselves about personal finance and practice budgeting regularly.

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The psychology behind overspending: why we forget to budget.

People often find themselves struggling to stick to their budgets, or worse, having no budget at all. This isn't just a matter of poor math skills or lack of discipline; it's deeply rooted in our psychology. Understanding the psychological factors that contribute to overspending is the first step towards gaining control of our finances and making sound financial decisions. The Thrill of the Purchase: How Dopamine Drives OverspendingOne of the primary culprits behind overspending is the neurotransmitter dopamine. When we make a purchase, particularly an impulsive one, our brains release dopamine, leading to feelings of pleasure and reward. This feeling is so powerful that it can create a cycle of overspending, where we chase the dopamine rush by buying more things, even if we don't need them. This cycle is further fueled by the constant bombardment of advertising and marketing messages designed to trigger these very responses. The Fear of Missing Out (FOMO): Social Pressure and Spending HabitsIn today's hyper-connected world, the fear of missing out, commonly known as FOMO, plays a significant role in our spending habits. Social media platforms constantly expose us to the curated lives of others, creating a sense of inadequacy or a desire to keep up with the Joneses. This perceived pressure can lead to impulsive purchases, particularly for experiences or material possessions that we believe will enhance our social standing or prevent us from feeling left behind. Cognitive Biases: The Mental Shortcuts That Lead to OverspendingOur brains rely on mental shortcuts, known as cognitive biases, to simplify decision-making. While these shortcuts can be helpful in many situations, they can also lead to irrational spending habits. For example, the "anchoring bias" causes us to rely too heavily on the first piece of information we receive, such as an original price, even if it's irrelevant. This can make us more likely to overspend on a sale item, even if the sale price is still higher than we would normally pay. The Power of Emotions: How Feelings Influence Our SpendingEmotions play a powerful role in our spending habits. When we experience negative emotions like stress, sadness, or boredom, we often turn to retail therapy as a coping mechanism. Shopping provides a temporary distraction from these feelings and triggers the release of dopamine, creating a fleeting sense of happiness. However, this relief is often short-lived, and the guilt and regret that follow can exacerbate the negative emotions we were trying to escape. The Impact of Lifestyle Inflation: The Cycle of Earning More and Spending MoreAs our income increases, it's common to experience lifestyle inflation, where our spending grows proportionally to our earnings. We upgrade our homes, cars, and possessions, justifying these expenses as rewards for our hard work. While it's natural to want to enjoy the fruits of our labor, unchecked lifestyle inflation can lead to a perpetual cycle of overspending and financial instability.In conclusion, overspending is often driven by a complex interplay of psychological factors. By understanding the role of dopamine, FOMO, cognitive biases, emotions, and lifestyle inflation, we can start to break free from these patterns and develop healthier financial habits. Recognizing these influences is the first step towards making conscious spending choices that align with our financial goals and values.

Budgeting Apps vs. Traditional Methods: Which Works Best for Students?

Budgeting is a crucial skill for students, as it helps them manage their finances effectively and avoid unnecessary debt. With the advent of technology, budgeting has become more accessible and convenient, thanks to budgeting apps. However, traditional budgeting methods, such as using pen and paper or a spreadsheet, are still widely used. This essay explores the advantages and disadvantages of both budgeting apps and traditional methods, and discusses which might work best for students. What are the advantages of budgeting apps for students?Budgeting apps offer several advantages for students. Firstly, they provide convenience. With a budgeting app, students can track their income and expenses anytime, anywhere, as long as they have their smartphones. This is particularly useful for students who are always on the go. Secondly, budgeting apps offer real-time tracking. This means students can see exactly where their money is going and make adjustments as necessary. Thirdly, budgeting apps often come with features that make budgeting easier and more efficient, such as automatic categorization of expenses, reminders for bill payments, and even savings goals. Lastly, budgeting apps can provide a visual representation of a student's financial situation, which can help them understand their spending habits better. How does traditional budgeting work for students?Traditional budgeting methods for students typically involve manually tracking income and expenses, often using pen and paper or a spreadsheet. This method requires discipline and consistency, as students need to record every transaction they make. While this can be time-consuming, it can also be beneficial as it forces students to be mindful of their spending. Additionally, traditional budgeting allows for flexibility. Students can customize their budget categories and adjust their spending limits as necessary. It also provides a tangible record of their financial habits, which can be useful for future reference. Why might some students prefer traditional budgeting methods over budgeting apps?Some students might prefer traditional budgeting methods over budgeting apps for several reasons. One reason is control. With traditional budgeting, students have complete control over their budget categories and spending limits. They can adjust these as necessary, depending on their financial situation. Another reason is privacy. Some students might be uncomfortable sharing their financial information with a third-party app. Lastly, traditional budgeting can provide a sense of accomplishment. Manually tracking income and expenses can be tedious, but it can also be rewarding, especially when students see their savings grow. Which budgeting method is more effective for students?The effectiveness of a budgeting method largely depends on the individual student's preferences and habits. For tech-savvy students who are always on their smartphones, a budgeting app might be more effective. These apps can provide real-time tracking and convenient features that make budgeting easier. On the other hand, for students who prefer a hands-on approach and value privacy, traditional budgeting might be more effective. Ultimately, the most effective budgeting method is the one that a student can stick to consistently. Are there any hybrid methods that combine budgeting apps and traditional methods?Yes, there are hybrid methods that combine the convenience of budgeting apps with the control of traditional methods. For instance, some budgeting apps allow users to manually input transactions, similar to traditional budgeting. This can be beneficial for students who want to be more involved in their budgeting process. Additionally, some students might use a budgeting app for tracking their daily expenses, but also keep a spreadsheet for a more detailed overview of their financial situation. This way, they can enjoy the best of both worlds.In conclusion, both budgeting apps and traditional methods have their merits. Budgeting apps offer convenience and real-time tracking, while traditional methods provide control and privacy. Some students might prefer one over the other, depending on their preferences and habits. However, it's also possible to combine both methods for a more comprehensive approach to budgeting. Ultimately, the most effective budgeting method is the one that a student can stick to consistently.

How Forgetting to Budget Impacts Long-Term Financial Health

Financial health is a critical aspect of our lives that influences our lifestyle, future goals, and overall well-being. One of the key pillars of maintaining good financial health is budgeting. However, many people overlook this crucial aspect, leading to a myriad of financial problems. This essay explores the importance of budgeting for long-term financial health, the consequences of not budgeting, and how one can recover from the impacts of not budgeting. What is the importance of budgeting for long-term financial health?Budgeting is a critical component of long-term financial health. It serves as a roadmap for your finances, guiding you on how to allocate your income towards various needs and wants. By creating a budget, you can track your income and expenses, identify unnecessary expenditures, and prioritize your spending. This allows you to save more and invest in your future. Without a budget, you may find yourself overspending on non-essential items, leading to debt accumulation and financial instability. In the long run, this can hinder your ability to build wealth, save for retirement, or meet other financial goals. Therefore, forgetting to budget can have severe implications for your long-term financial health. How does forgetting to budget lead to financial instability?Forgetting to budget can lead to financial instability in several ways. First, without a budget, you may not have a clear understanding of your income and expenses. This can lead to overspending, which can result in debt. Second, without a budget, you may not be saving enough for emergencies or future goals. This can leave you financially vulnerable in the event of unexpected expenses or income loss. Third, without a budget, you may not be investing wisely for your future. This can impact your long-term financial health and retirement plans. Therefore, forgetting to budget can lead to financial instability and stress. What are the consequences of not budgeting on future financial goals?Not budgeting can have serious consequences on your future financial goals. Without a budget, you may not be saving or investing enough to meet these goals. For example, you may want to buy a house, start a business, or retire comfortably. Without a budget, you may find it difficult to save for the down payment on a house, the startup costs for a business, or the nest egg needed for a comfortable retirement. Additionally, without a budget, you may be more likely to incur debt, which can further hinder your ability to meet these goals. Therefore, not budgeting can delay or even prevent you from achieving your future financial goals. Why is budgeting crucial for debt management?Budgeting is crucial for debt management because it helps you keep track of your income and expenses, and ensures that you have enough money to make your debt payments. Without a budget, you may find yourself spending more than you earn, which can lead to increased debt. Additionally, a budget can help you identify areas where you can cut back on spending, freeing up more money to pay down your debt. It can also help you plan for future expenses, preventing you from taking on more debt. Therefore, budgeting is a key tool in managing and reducing debt. How can one recover from the impacts of not budgeting?Recovering from the impacts of not budgeting requires a commitment to change and a plan of action. First, it's important to start budgeting. This involves tracking your income and expenses, identifying areas for savings, and setting financial goals. Second, it's important to start saving and investing. This can help you build an emergency fund, save for future goals, and invest for your retirement. Third, it's important to manage and reduce your debt. This can involve creating a debt repayment plan, negotiating with creditors, or seeking professional help. With time and effort, it's possible to recover from the impacts of not budgeting and improve your long-term financial health.In conclusion, budgeting is an essential tool for maintaining long-term financial health. It helps us manage our income and expenses, save for future goals, and reduce debt. Forgetting to budget can lead to financial instability, hinder our ability to meet future financial goals, and make debt management more challenging. However, by committing to change and implementing a plan of action, it's possible to recover from the impacts of not budgeting and improve our long-term financial health. Therefore, it's crucial to make budgeting a regular part of our financial routine.

Creating a Foolproof Budget Plan: Tips for the Forgetful Student

Managing finances can be a daunting task, especially for students who are often juggling academic responsibilities, part-time jobs, and social life. For the forgetful student, the challenge is even greater. However, with a foolproof budget plan, students can effectively manage their finances, avoid unnecessary debt, and achieve their financial goals. This essay explores the essential steps in creating a budget plan, the importance of budgeting for forgetful students, how technology can aid in budgeting, budgeting tips specifically for forgetful students, and the possibility of creating a foolproof budget plan as a student. What are the essential steps in creating a foolproof budget plan for students?Creating a foolproof budget plan for students involves several crucial steps. First, it's important to understand your income sources. This could be from a part-time job, parental support, scholarships, or student loans. Second, track your expenses. This includes both fixed costs like rent and utilities, and variable costs like groceries, entertainment, and personal care items. Third, set financial goals. These could be short-term, like saving for a vacation, or long-term, like paying off student loans. Fourth, create a budget. Allocate specific amounts to different expense categories based on your income and goals. Finally, review and adjust your budget regularly. This will help you stay on track and make necessary changes as your financial situation evolves. Why is budgeting important for forgetful students?Budgeting is particularly important for forgetful students as it helps them manage their finances effectively and avoid unnecessary debt. It provides a clear picture of income and expenses, making it easier to make informed financial decisions. A well-planned budget can also help students save for future expenses and achieve their financial goals. Moreover, it instills discipline and responsibility, essential skills for life beyond college. For forgetful students, having a budget plan can serve as a constant reminder of their financial obligations and goals, reducing the chances of overspending or forgetting to pay bills. How can technology aid in budgeting for forgetful students?Technology can be a great aid in budgeting for forgetful students. There are numerous budgeting apps and software available that can help students track their income and expenses, set financial goals, and create a budget. These tools often come with features like reminders for bill payments, alerts for overspending, and visual representations of spending habits, making budgeting easier and more efficient. Some apps even offer the ability to link with bank accounts and credit cards for real-time tracking. By leveraging technology, forgetful students can ensure they stay on top of their finances. What are some budgeting tips specifically for forgetful students?For forgetful students, there are several budgeting tips that can be particularly helpful. First, automate as much as possible. This could include setting up automatic payments for bills or automatic transfers to a savings account. Second, use budgeting apps with reminder features. These can alert you when you're nearing your spending limit or when a bill is due. Third, keep your budget simple. The more complicated it is, the harder it will be to stick to. Finally, make a habit of reviewing your budget regularly. This will not only help you remember your budget but also allow you to make necessary adjustments. Is it possible to create a foolproof budget plan as a student?Yes, it is possible to create a foolproof budget plan as a student. The key is to be realistic about your income and expenses, set achievable financial goals, and stick to your budget. It's also important to review and adjust your budget regularly to reflect changes in your financial situation. While it may seem challenging at first, with practice and discipline, budgeting can become a habit. Remember, the goal of a budget is not to restrict spending, but to empower you to make informed financial decisions.In conclusion, creating a foolproof budget plan is not only possible but also essential for students, particularly those who tend to be forgetful. By understanding their income and expenses, setting financial goals, leveraging technology, and following specific budgeting tips, students can effectively manage their finances. While it may require discipline and consistency, the benefits of budgeting extend beyond financial health to include life skills like responsibility and informed decision-making. Therefore, budgeting is a crucial skill that every student should master.

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What Are The Consequences Of Not Budgeting?

Budgeting is indispensable for personal money management, yet many individuals and couples overlook its importance. Some people don’t want accountability, even to themselves, and others have never been taught how to create a budget however failing to establish and adhere to a budget can have serious consequences that impact both short-term financial stability and long-term goals. From living paycheck to paycheck to accumulating debt and lacking savings, the repercussions of not budgeting can be far-reaching. In this article, we will explore 5 consequences of neglecting proper budgeting practices and the steps that can be taken to avoid them.

5 Consequences of Not Budgeting

1. accumulation of debt.

By far the #1 most common consequence of not budgeting is the accumulation of debt.  If you don’t manage your money through the lens of a monthly zero-based budget you are unlikely to have the money needed when the family dog needs a $3,000 surgery.  When this happens, or any other similar situations occur, the credit card comes out and more debt is created.  However, when you follow a carefully planned zero-based budget, you are able to create the margin needed in your finances to handle such situations. 

The consequences of not budgeting include the accumulation of debt.  Debt is a financial product that enriches the (lender) bank, not you.  Your bank is not like your local library.  They won’t let you borrow for free and bring it back whenever you feel like it.  Your bank exists to make money and its primary product is debt.  Their goal is to sell you as much debt as they can, for as long as they can.  And it all comes at your expense.  You can’t build a stable financial future playing catch up. 

Learn how to  create a zero-based budget  or  download a free zero-based budget pdf  here.

2. Little or no emergency fund savings

Emergency funds create a buffer between you and debt.  An emergency fund is an amount of money set aside (in a separate savings account) that is used for surprise expenses that are not typically contemplated in your monthly budget.  For instance, you may include a small amount of money in your monthly budget for car maintenance such as oil changes.  However, what do you do at your next oil change when the mechanic tells you you’ll need a new water pump or risk being stranded soon?  This is where an emergency fund comes in.  An emergency fund keeps you from using debt to pay for surprise expenses.

A very common consequence of not budgeting is the lack of emergency fund savings.  Budgeting creates peace of mind so when life’s inevitible curve balls come, you are prepared to respond.  Budgeting helps you create and sustain emergency funds.  When you have emergency funds in the bank, most emergencies become more of an inconvenience than an emergency.  It is a great feeling.

3. Little or no retirement savings

Retiring takes planning…in advance…on purpose.  However, people who do not budget rarely have a workable plan in place.  Why?  Because when you are living paycheck to paycheck there is always something that you feel needs attention more than an event that is 25 years or more away.  At least that is the story you tell yourself.  As with anything personal finance, it all begins and is maintained with a budget and by knowing your numbers.

Retiring with a seven-figure retirement account is possible through wise and diligent financial management throughout a person’s working life.  In other words by budgeting your income!  (See this article on  saving money from your salary  for more information.) 

To avoice the consequense of not budgeting, begin today with your first zero-based budget.  Start a budget today  and learn how to win with money.

4. Money stress & anxiety

Does the check engine light cause stress?  Paying for Christmas on credit?  Always feeling broke?  These are tale-tale signs that you are failing to budget.

Following a zero-based budget removes the unknowns and replaces them with knowns.  When the unknowns are reduced the anxiety level reduces as well.  Most people experience anxiety around money because they don’t really know where their money is going or if they’ll have enough when they need it.  What if I told you that you could know with almost certainty that when your car breaks down, you’ll have enough money to pay for the repairs in cash?  Or that if your home’s roof springs a leak, you can handle the new roof without using credit?  I bet your anxiety level would be reduced.  A well-planned and executed zero-based budget allows you to know where your money is, where it is going, and how much you need to save to keep “Murphy’s law” from your front door.

A monthly zero-based budget brings clarity out of confusion.  Consequences of not budgeting don’t have to be a part of your life.   Start a budget today  and learn how to win with money.

5. Paycheck-to-paycheck living

If you missed a single paycheck what would happen?  How about two paychecks?  If this scenario would cause you substantial financial difficulties, you are living paycheck to paycheck. However, with a monthly zero-based budget you are able to organize your income so you can  get ahead on your bills  and leave paycheck-to-paycheck living behind.  Learn more about  how to get ahead on your bills  here.

Living paycheck to paycheck is not fun.  It is full of anxiety and for good reason.  When you live paycheck to paycheck you are one missed payday away from having significant financial stress.  To eliminate this consequence of not budgeting you’ll need to begin by making a monthly zero-based budget and let that budget guide your money choices moving forward.

Consequences of not budgeting:  What to do now.

A monthly  zero-based budget  is the pillar of financial control.  If you want to avoid the consequences of not budgeting you’ll need to begin by creating a zero-based budget so that you can generate the financial margin needed to get ahead.  The signs are simple to see if you look.  Instead of living paycheck to paycheck or lacking emergency savings you can use a zero-based budget to make a plan for your money before the month begins.  Doing so will help you save for retirement, plan ahead for inevitable emergencies, and most importantly…avoid debt!

• Begin by making a zero-based budget for your monthly income and expenses.  Get a  free zero-based budget pdf  here.
• Follow that budget so that all of the money you earn is pointed toward your goals and dreams.
• If you do not have any extra money in your budget then you’ll need to look at each expense category for ways to cut expenses so that you can avoid the consequences of not budgeting.
• Plan a budget for each month, year after year and you’ll soon begin to see the benefits of budgeting and being in control of your money.

Bonus: 7 Steps to Financial Wellness

• Save a starter emergency fund of $1,000 as fast as you can.
• Pay off your debt. Start by listing all of your debts except for your mortgage. Put them in order by balance from smallest to largest—regardless of interest rate. Pay minimum payments on everything but the little one.  Focus on that one until it is gone. Then take that payment and put it toward the second-smallest debt, making minimum payments on the rest. That’s what’s called the debt snowball method, and you’ll use it to knock out your debts one by one until you are debt-free except for the house.
• Save a full emergency fund of 3 to 6 months of household expenses
• INVEST  15% of your gross income toward retirement.
• CONTRIBUTE  to children’s college education fund.
• PAY  off the house early.
• Build wealth and be generous.

Note:  Steps 4,5 & 6 are worked on at the same time.

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