Your definition of budget is wrong and you must read this! A budget is not a money diet! Perhaps this is why you could be avoiding it?

Your Definition of Budget is Wrong

Your definition of budget just might be wrong and you must read this! A budget is not a money diet! Perhaps this is why you could be avoiding it?

I love to read personal finance books (yes, I’m a nerd and I know it).  However, there is one thing that I’ve seen in multiple books that just isn’t correct.  I keep seeing the authors discuss ways to reach financial goals and plan for your money and say things such as “IT’S NOT A BUDGET. BUDGETS DON’T WORK”.  And then they suggest that you make a spending plan instead.  They say that a spending plan is a realistic plan for the week/month/year for how much money you’re going to spend in a number of different categories.  Well folks, I’m here to tell you this:

Any money spending plan for any length of time is a BUDGET.

There you go.  Call it whatever you want, but if you’re make a spending plan of any kind, it’s a BUDGET.


The word “budget” that we are talking about is not to be confused with the adjective “budget” which is defined as being inexpensive or cheap.  I understand why people hate the word budget.  They feel some sort of connection between the Budget (noun) and Budget (adjective) because their previous attempts to budget were unsuccessful, their previous budget amounts were possibly unrealistic, or they just didn’t allow themselves enough time to really make it work.

It’s time to change the way that you think about budgeting.  You (and only you) should set up your own budget categories and amounts and if you can afford to and want to spend a thousand dollars on eating out this month, put it on your spending plan (aka BUDGET) and go eat!  The noun budget isn’t actually defined with any sort of restriction or limitation attached.  It’s very simply a plan and that’s it.  

If you’re struggling with the word or even the concept of budgeting, it may be because you’re in a precarious financial situation and it’s painful to look at your money situation.  Maybe you’re having trouble cutting your expenses and you are feeling discouraged and feel restricted.  That’s why we started out with setting financial goals.  You have to have a specific goal in mind that is worth more to you than the things that you want right now.

Your budget doesn’t have to be a minimum of what you want to spend in each category for each month.  There’s no right or wrong answer for how much you budget for any category.  If you want an example of this, go to this awesome website Save. Spend. Splurge.  Her most recent month (March 2016) shows her spending significantly more on clothing and shoes than even on rent and utilities.  And it’s okay, because she can afford it-it’s in her budget!


Your new spending plan (aka BUDGET) is going to help you reach your goals and here are 5 ways that it will:

  1. A budget compares your income to your expenses – the absolute number ONE rule of personal finance is to make sure your expenses do not exceed your income.  It’s so simple, but when you’re out spending money daily on things that you both want and need, you need some way to plan for them in total so that you can plan to meet your goals.
  2. A clear written budget helps you to be on the same page as your spouse or partner so that you can meet your goals together.
  3. A budget helps you to know how much money to allocate to certain saving categories so that you can meet your goal of having an emergency fund and putting money aside for future retirement needs.
  4. A budget organized with clear categories forces you to look at what you really want to spend your money on and whether what you’re spending on is in line with meeting your goals.
  5.  A budget helps you to determine major financial decisions such as how much you need in an emergency fund & cash reserve, how much you can afford to spend on a mortgage or car payment and how much money you will need at retirement to cover your expenses and still be able to meet your other financial goals.

It’s about goals, really.  If you have financial goals that you want to achieve, you need a budget!


The substitute for not having clear financial goals seems to be the goal of amassing as many material goods as possible to have something to “show” for your hard-earned income, but this is at the expense of your future.  A budget is going to help you to reach your goals!  It’s an essential financial tool and it’s going to help you measure your progress, not restrict you from things that you want.  Here are my top two suggestions for your budget that I highly suggest you consider to make it work:

  1. Set up an allowance amount for each member of your family, both adults and children.  Even if you can only afford a few dollars, it will mean that everyone has some money to spend that doesn’t have to be accounted for in any other category.  My husband and I have had this allowance system for at least 5 years now and it has saved us from so many arguments about spending habits.  The unused allowance amounts should carry over each month or you should pull out the cash every month for each person.
  2. Make your budget flexible and change it each week as you have updated information on your financial situation.  For example, if you reach week 3 of the month and you have already spent 95% of your grocery budget because of a dinner party you had, add more money in your grocery budget if you need it for the rest of the month.  It’s not realistic to expect yourself not to buy groceries for 2 weeks.  From my own personal experience, I know that if you don’t make your budget flexible you may be inclined to “blow” the whole budget because you’re already so far over that it “doesn’t matter anyway.”  Remember a budget is just a plan and plans change sometimes!

Don’t give up on your BUDGET!  Give it a couple of months and be sure to be realistic.  And don’t forget-it’s all about reaching your goals!

What do you think of when you hear the word “budget”?


21 Responses

  1. What do you think of when you hear the word “budget”?- I think of a plan! A plan for where I am going to spend my money. Without a plan aka a budget, I would have no control of my money. It disappears very quickly 🙂

  2. I love to budget too! It is NOT a bad word! It is being real about your money. When we started making a budget and planning out what we need and what we want, it became so much more fun to think about money!
    And I love how you say to be flexible about your budget. I think of things periodically–like school uniforms, boy scout supplies, canning supplies, etc. that need to be added to the budget. And then we work them into the budget. Even if I can only save a few dollars a month for something, that means the money will be there when I need it!
    We use the cash envelope system. We pull money out monthly for the Christmas fund, birthdays, Costco membership, groceries, etc. We use our debit card for gas, but it’s budgeted in for a certain amount per month. And I use online accounts to automatically pull out money for car repair, a new car fund, vacation, home repairs, etc.
    Having a budget means I won’t wake up in a financial mess and wonder how I got there.
    I love your thoughts about it! It’s a good reminder that it’s all worth it!

    1. I would rather budget every day than clean the house (realistically, there probably is more budgeting than cleaning going on around here-lol).
      I love your comment about a budget keeping you from finding yourself in a financial mess. I think it’s all too common these days for people that don’t keep track of their money and I can see that from the time before we really managed our money very well. I knew there wasn’t as much money as I thought we should have saved, but I didn’t really know where it all went. Thanks for stopping by!

  3. Thinking of coming up with a budget makes my head hurt, but living without one brings on a migraine. I’d rather just do the work upfront and enjoy the fruits of that minor headache (inconvenience). I really can’t deal with the stress that comes from not having a budget and I like how you encourage others to think of it as a simple plan that allows for adjustments. Too many people feel like their life will be pretty dull with a budget, but it truly is sad without one.

  4. It is funny how just changing a word can change how people respond to the exact same thing. I think if some people are willing to make a budget by just not calling it a budget, that’s totally fine. But I do agree, at the end of the day, any kind of spending plan is really just a synonym for budget.

    1. You’re so right – perhaps I should just let people call it whatever they want? Except if you’re writing personal finance books-then I think they should just admit it’s a budget. Haha! 🙂

  5. Words can have connotations good and bad and sometimes both, and I think sometimes we need to recognize that sometimes changing a label can change someone’s willingness to try something. Pasta Con Queso may sound way more interesting than Macaroni and Cheese to a teenager, but any 5 year old is going to take Mac and Cheese every time. Plan in my mind infers a goal attached, while budget has the connotation to many people of limitations. So I may budget (I’m fine with limits) and someone else may follow a spending plan, but our goals and behavior may be exactly the same.

    If calling something a spending plan instead of a budget helps people budget, then I think it’s okay and I’m not sure they need to recognize that it’s really a budget.

    1. I had to laugh about the macaroni & cheese example because my kids had an absolute favorite macaroni & cheese while living in Asia that the restaurant actually called “o’macaronne” and had squid in it. We didn’t tell them until the last day before our move when we went there for the last time about the “secret” ingredient.

      I think you’re right-people may have bad experiences budgeting, and seeing it in a different context may be helpful for them.

  6. I love my budget, or spending plan, or whatever you want to call it. It’s what helps keep me organized and sure that I’m spending my money how I want to in the long run, not just in the moment. My wife and I don’t have individual allowances, but decide together on what we spend (and save). But we do stay flexible to make it work, and we update our budget as often as needed to reflect any changes.

    1. I think that’s probably better than allowances to communicate and agree on what you are spending and saving. My husband and I tend to be on the opposite end of the spend/save spectrum, so it’s a great solution for us.

  7. I think my problem is keeping my budget too flexible. I leave too much wiggle room and don’t assign every dollar a task, which is something I really need to work on.

    1. Zero-based budgeting will change your life! I physically have to move money out of my savings categories when I overspend and it makes me think about whether I just wasted that money on something I didn’t need. Definitely give it a try-I just posted a class today on budgeting.

  8. When I hear the word “budget” I definitely think of a formal spending plan where there is a “maximum” allowed per category. Anything outside of that spending plan should arguably be an emergency. If you overspend, it’s time to analyze what didn’t work right – did you give into a spending temptation? Did some unexpected spend occur that you didn’t anticipate but was justified? I think of budgeting in a really specific term…which is different than some people think of it.

    1. With using a zero-based budget, I also definitely relate to the “maximum” part of budgeting. I consciously have to move money out of my savings category if I overspend on other categories, so it forces me to think about whether my overspending was necessary or wasteful. I think we have a very similar view on this.

  9. I also think a spending plan is a budget. At least that’s what I learned from all the PF resources I read. It allows us to set some main categories and then allocate funds. we then see what worked and what didn’t, then readjust.

    1. I think readjusting is important for sure in budgeting and something too often overlooked. Thanks for stopping by!



I’m Kathryn Hanna-wife, mother of 3 and a Certified Public Accountant. I love to budget (really, I do!) , build spreadsheets and spend money on travel, sewing supplies and good chocolate.


12 Month Financial Plan Sidebar


Easy-to-customize spreadsheets to improve your entire financial life from budgeting to tax and retirement planning.