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400 Reasons To Budget

July 27, 2017

Okay, so I’m not really going to list out 400 reasons to budget but if you keep reading you’ll see why the post is named as it is:)

According to this 2019 study by The Federal Reserve, approximately 4 in 10 Americans surveyed reported that they would need to borrow money—from family or as a balance on a credit card they would not be able to pay at the end of the month—in order to pay an unexpected expense of $400.

Back just a few years earlier, the same outfit reported in their survey of 5,000 households, that approximately 46% of Americans could not handle an unexpected expense of $400 or more. I have spent years in that camp, and am so grateful I finally got in charge of my spending so I have a buffer between me and life.

Close to the Edge

$400 does not cover all that much, people, and is a staggering indication of how close to the edge almost half of us are living. Some are maybe even doing figurative yoga at the edge.

$400 might cover an airplane ticket to visit an ailing parent, but what about the other travel costs?

It would not replace the uninsured cell phone you drop in the river and toilet. I wish that was only hypothetical :-)

$400 would not cover a more-than-minor car repair. Like the $1,200 collection of maintenance I had 2 months ago.

I hear it would barely be a drop in the bucket for funeral expenses for a loved one and would just barely cover the least expensive refrigerator I found online at Sears on a 40% Memorial Day sale.

Income does not equal successful

Another thing that I found shocking in the 2016 report was that nearly 20% of people making $100,000/year could not cover the $400 expense.

Those earning less than $40,000/year struggle the most which makes sense; just paying for the essentials doesn't leave much margin.

A few months back, I remember being floored by a Dave Ramsey “Debt-Free-Scream” of a couple who had paid off something like $30,000 in 2 years while earning only $24,000 AND raising 8 children. Even if my recollection is not 100% accurate, it was astounding what that family was able to do with discipline and focus and planning.

My take away from their story is that there is no income level at which you cannot be blessed by planning your spending. And the goal is for no one to spend forever at that income, unless they want to.

The 40%

Back to the 40% who in 2019 either had to borrow or forgo (if an option—it’s not always) the $400 expense. My heart aches for the stress these people have got to be feeling. I know because I spent plenty of time in that territory.

Denial is alive and well and in some cases gratefully helps you enjoy your present while not thinking about all the unexpected occurrences—financial or other—that are likely coming up. But there is really no way to prevent our things from wearing down or breaking or needing replacement or maintenance. Every physical object does at some point.

Also, bodily disease and injury are alive and well and, while I am so grateful for modern medicine, it does cost monies to treat.

Fire, flood, wind storms, job loss, global pandemics…all real things that come seemingly out of nowhere, all bringing financial ramifications.

Budgeting and control

One of the main reasons why I love budgeting is the sense of control I feel. I’m not obsessed with control, but there are so many things in life that we cannot control. The news does a real A+ job of bringing some of them to our attention.

Thus, it’s important we control what we can control. Budgeting is just exercising control over the money you acquire through employment, self-employment, alimony/child support, selling stuff, inheriting, gifts, etc. It's planning ahead for the things you know are coming as well as those unforeseen events—both the good ones and the rough ones—that make life interesting.

One final thought

Can’t help it. Or I guess I can, but won’t :-) Just about any person or household could realistically make an extra $400 in a non-emergency month, or trim back expenses in the normal months to have at least $400 saved for a rainy day.

There are a lot of ideas: driving Uber, delivering pizza, housecleaning, babysitting, freelancing with your professional skill. These may not be glamorous activities but they capture for me kind of what people have done for centuries. That is to figure out a way to feed their families and pay for the things they needed and wanted.

And when you combine this sort of hustle and/or cutting expense with the act of intentional, zero-based budgeting, it's pure magic. You will know where to put that money instead of having it waste away. And seeing your savings buffer grow is tremendously reassuring, even before you need to use it for an unexpected life happening.

And hey, should you choose to do something like deliver pizza, I suspect you might get some free pizza in your life and that is a good thing.

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