Aiming for financial growth is a common goal for all of us. Who dislikes wealth and success? Nobody. We all like to experience having a lot of money but unfortunately, we live in a society that encourages us to spend beyond our means. That’s consumerism for you.
When the nationwide financial crisis struck most of the American households, everyone looked unto budgeting to help them organize their out of control financial lives. This is one of the tips given by successful people about personal finance. You need to take control back and that requires you to create a budget plan. This will help you identify your income and the expenses that it pays off.
5 reasons your budget plan will not take your finances to the next level
But while budgeting is very helpful, your efforts should not end there. Some people make the mistake of focusing too much on their budget plan and when it fails to deliver, they end up feeling discouraged. A budget is the first step towards financial independence – it is not the only step. If you make it your only step, there are 5 reasons that it will not give you the financial growth that you are expecting.
Budgeting can be tedious. To tell you frankly, creating and monitoring a budget can get tedious. If you have to work hard on something, you want it produce results right? The sentiment is understandable. However, for the amount of time and effort that you will put in your budget, counting the monetary returns will not give you a satisfying result. It will point you to what you need to do but not how you should accomplish it. So focusing on your budget plan will fall short of what you expect. All of this will only end up frustrating you and discourage you from continuing with the budget.
Budgeting requires you to sacrifice a lot. This actually depends on how far you have fallen in terms of your financial crisis. But usually, your budget will show you the various sacrifices that you have to make in order to reach your goal. It can be expenses that you can no longer afford or entertainment expenses that are not allowed to be spent on. The reality that you will face in your budget can be discouraging – unless you see the fruits of your sacrifices. This, again, is not attainable by your mere budget plan.
Budgeting are wrongly thought to be consistent. This is actually a popular misconception about your budget plan. You need to think about your budget as a flexible plan. In case your money grows or decreases, you need to revise your budget to allow you to maximize the changes happening to your finances. While this is true, you have to be careful about being too quick to upgrade your lifestyle to suit the increase that you experience. When your money decreases, you need to change your budget immediately to make sure your expenses will not go beyond your new income. But when it increases, what you need to change is not your expenses – but your savings.
Budgeting primarily changes your behavior. When you want financial growth, you need more than a budget because it only modifies your behavior. As mentioned, it will not teach you how you will do something. It will just tell you where your money should go to. It will not teach you how to improve your cash flow – that is the main fault of your budget efforts.
Budgeting can give you a false sense of complacency. As you continue to use and implement your budget, you will realize that as soon as you are able to put your expenses within your income capabilities, you get complacent. But the thing is, that is not success. It leaves you stagnant. Your budget focuses more on keeping your spending beneath your earnings. It does not teach you to earn more. That is where it falls short and that is the reason why it is not a fitting tool for financial growth.
Do not get locked in your budget
The whole essence of this article is this: do not get locked in your budget that you lose sight of the other tools that you can use to get yourself out of a financial crisis and into growth. There are other important things that you need to learn to grow your money. While budgeting is integral as your first step, you need to take more than that to succeed.
You need to learn how to save, spend your money wisely and you need to learn how to invest. The last part is key to the financial growth that you wish to achieve. Both saving and investing are actually proactive ways to help you grow your money.
We encourage you to learn more about what you can do to grow your finances by educating yourself. There are other resource websites like this one that you can utilize to learn about personal finance. In fact, we found the ebizmba.com has a list of the personal finance websites that we can recommend for you. In the end, your knowledge will be the catalyst for the improvement of your financial well-being.