“I don’t need a budget!”, “I really don’t spend much!”, or “I am in college and have no money, why would I need a budget?” Do these words sound familiar to you? Maybe a loved one says this whenever budgeting comes up. Maybe those words sound familiar because you’ve heard them come out of your own mouth. Regardless of who says these words, it is not uncommon for people to have a disdain for budgeting. I am here to explain why budgeting is beautiful.
My enjoyment of budgeting increased exponentially when I understood the concept of opportunity cost. Opportunity costs, as defined by Investopedia, “represent the benefits an individual, investor or business misses out on when choosing one alternative over another.” Essentially opportunity cost is giving up one thing because you decided to pursue something else. Budgeting became so much more important when I understood that, for every dollar spent, it is a dollar I will be unable to use. So, for example, if I spend money eating lunch at the office, it probably means I will be unable to eat-out with my friends later this week.
This leads to the beauty of budgeting. Using my budget allows me to see where I am spending my money. If I realize every dollar spent means giving up another opportunity, I am more attentive to “money waste”. Money waste is when I spend money on things I don’t want and don’t need. Budgeting reduces when I “accidentally” eat out or when I “accidentally” buy a new pair of shoes. A good example of the combination of these budgeting and opportunity cost comes from my internship this summer. Over the summer, I only bought food at the office where I worked a handful of times. I did this because I valued being able to eat out with my friends in the evenings more than the ease of not needing to pack a lunch every day. I knew that I did not have the funds available to eat out for lunch every day because of my budget. Opportunity costs remind me of my limited money supply and budgeting helps point out when I am spending that scarce resource on things I neither want or need.
Are you wanting to develop a budget? Consider coming into Powercat Financial where we provide free and confidential advice to all K-State students. If you are ready to more efficiently use your money, schedule an appointment at https://www.k-state.edu/powercatfinancial/. We would love to help you develop healthy financial habits!
Peer Counselor II