Living On A Budget Is For Losers

I’ve never liked the word “loser.”
It’s negative, it doesn’t motivate anyone, and when it comes to money, it doesn’t help people move forward.

If you believe living on a budget is for losers, I’m probably not going to change your mind overnight.

Eventually, though, life has a way of teaching us lessons about money whether we’re ready for them or not.

Using a budget doesn’t make you a loser.

It means you’ve made a decision to pay attention to your money.

Mrs. CBB and I have had friends ask us to go places or do things that simply weren’t in our budget. We politely declined.

Some people have cringed when we’ve told them we use a budget.

We probably have a similar reaction when someone tells us they don’t manage their money at all.

For some people, the system is:
Earn → Spend → Deal with whatever happens next.

That has never been the way we’ve wanted to manage our finances.

Knowing where our money is going gives us choices. It allows us to plan, save and decide what matters most.

Why “Budgeting Is for Losers” Can Be an Expensive Mindset

Years ago, while Mrs. CBB was at a medical appointment, I started chatting with the staff member who was helping us.

I’ll call her Cindy.

Those of you who have been reading Canadian Budget Binder for a while know that I’m curious about how people manage their money.

I like asking questions.

Not because I’m judging anyone, but because listening to other people’s financial experiences teaches me a lot about how differently we all view money.

Cindy had been working in the medical field for just over a year after graduating from university.

During one of the quieter moments of the appointment, I asked her about her education and how she ended up in her career.

She explained that earning a university degree had been important to her because she felt it would create more opportunities in the future.

What she didn’t want was all the debt that came along with it.

That wasn’t the first time I had heard someone say that having a degree could open doors even when the eventual job wasn’t exactly what they had originally studied.

Then I asked Cindy another question.

Did she use a budget to manage her money every month?

Her answer was simple.
“No, but I should.”

She told me that when she first went to university, she thought budgets were for losers.

In her mind, budgeting was something done by people who studied finance or had nothing better to do than count every penny they earned.

Then she smiled and said something important.

“I’m not that person anymore.”
Life had changed her perspective.

The Financial Reality After University

Many students head off to college or university thinking mostly about classes, friends, independence and the experience of being away from home.

Not everyone thinks about what happens financially once school is finished.

Cindy told us she wasn’t prepared for managing money on her own.

Growing up, her parents had been generous with her and often bought her the things she wanted.

When she moved away to school, she continued spending in much the same way.

There wasn’t much thought behind where the money was coming from or how it would eventually be paid back.

Over roughly five years of school, Cindy accumulated more than $25,000 in credit card debt and student loans.

By the time everything started piling up, her attitude toward money had changed dramatically.

She wanted to become debt-free.
More importantly, she wished she had understood the consequences before getting herself into debt in the first place.

That’s one of those lessons many of us learn only after making mistakes.

We can look back at a period of our lives and wonder how we ever thought we had everything figured out.

Sometimes we were simply coasting along, believing everything would work itself out.

Teach Children About Money Before They Leave Home

Cindy’s experience also reminded me how important it is for parents to teach children about money.

Giving children everything they want may seem generous at the time, but it can make adulthood harder if they never learn how to earn, save, wait and make choices.

There is value in hearing:

“No, we’re not buying that today.”

There is value in saving for something.

There is value in earning money instead of always receiving it.

And there is value in learning that wanting something doesn’t automatically mean you should have it.

I’ve watched friends struggle with this as their children grow older.

One friend was working hard to change his daughter’s habit of wanting something every time they went shopping.

Those lessons may not always be popular when children are young, but they can help prevent much larger financial problems later.

Teaching children about money isn’t about denying them everything.

It’s about helping them understand that money is limited and choices have consequences.

Financial Education Matters

From what Cindy told me, she had grown up in a hardworking family.

Her parents provided for their children, but money management wasn’t something they talked about very much.

That’s common.

Many students graduate from high school knowing how to solve equations or write essays but have little experience creating a budget, using credit responsibly, understanding interest, comparing financial products or planning for irregular expenses.

Those are skills people need throughout their entire lives.

The belief that budgeting is somehow embarrassing needs to disappear.

Life is expensive.

There are more ways than ever to spend money, and technology has made it incredibly easy to do so.

A few taps on a phone can buy clothes, dinner, concert tickets, subscriptions or almost anything else.

That convenience can be useful, but it can also make spending feel less real.

Money can leave your account very quickly when you’re not paying attention.

A budget gives you that awareness.

Leaving Home for University

Cindy grew up outside Toronto and eventually packed her belongings into her car and headed to Sudbury, Ontario, for university.

For the first time, she was responsible for making many of her own financial decisions.

She had student loans, but one of the financial decisions she regretted most was signing up for a credit card while she was a student.

Credit can seem harmless when you first get access to it.

You buy something today and worry about paying for it later.
The problem starts when “later” keeps getting pushed further into the future.

A small balance becomes a larger balance.

Interest gets added.

Then another purchase goes on the card.

Eventually, the minimum payment may be all someone can afford.

That can keep a person in debt for years.

Credit cards aren’t automatically bad.

They can be useful financial tools when used responsibly.

But without income, a repayment plan or an understanding of how interest works, they can become very expensive.

Cindy learned that lesson the hard way.

Does Budgeting Make You a Loser?

By the time Cindy finished school, she had credit card debt and student loans and had moved back in with her parents.

Remember, this was the same person who once thought budgeting was for losers.

It would have been easy to point at her debt and say, “Look who the loser is now.”

But I don’t believe that.
Financial mistakes don’t make someone a loser.

They make someone human.
What matters is what happens next.

Cindy realized she needed to change.

She could continue spending the way she always had, or she could take control of her money.

She chose the second option.

You Don’t Necessarily Need a Complicated Budget

Some people tell me they don’t need a budget because they simply spend less than they earn.

If that genuinely works for you, great.

The important thing is that you know where your money is going and that your financial goals are being funded.

A budget doesn’t have to mean tracking every penny forever.

For some people, that level of detail is exactly what they need.

For others, a simpler system works.

• What matters is having a plan.
• How much money is coming in?
• How much is going out?
• What bills need to be paid?
• How much debt are you carrying?
• What are you saving for?
• What expenses are coming later in the year?

If you don’t know the answers to those questions, it becomes very difficult to make informed financial decisions.

Moving Back Home to Pay Off Debt

After university, Cindy moved back in with her parents because she couldn’t afford to live on her own while paying down her debt.

Her mindset about money had changed completely.

She wanted out of debt.

She also wanted the independence of having her own home again.

That gave her something important to work toward.

A goal.

Rather than looking at budgeting as punishment, she began seeing it as the tool that could help her get where she wanted to go.

She found a free budgeting spreadsheet online and began tracking her expenses.

Then she created a debt-reduction plan.

Her goal was to pay off her student loans and credit card debt within two years if possible.

It was ambitious, but she was determined.

Her Debt Repayment Plan

Living with her parents allowed Cindy to put a significant amount of money toward her debt each month.

At the time we spoke, she told me she was putting approximately:

• $1,000 per month toward her credit card
• $500 per month toward her student loans
• $500 per month toward rent paid to her parents

Her rent included groceries.

She was also responsible for her own car insurance, car payment, cell phone and personal spending.

Cable and internet were included while she lived at home.

She knew she still had a long way to go, but for the first time she felt like she had a clear financial direction.

Instead of waiting for something to magically change, she was making it happen.

Debt Can Affect More Than Your Bank Account

There was another side to Cindy’s debt that I thought was interesting.

She wanted to move closer to work.

Her current commute was costing her money in gas, vehicle wear and tear, insurance and, perhaps most importantly, time.

Being able to afford her own place closer to work would improve several parts of her life.
Debt was also affecting her personal life.

She told me she wasn’t comfortable getting into a serious relationship while she was living at home because of her debt.

Whether someone else would have cared about her living situation is another question, but she cared.

The debt had affected how she felt about herself and what she believed she was ready to do.

That’s why debt is about much more than numbers.

It can affect your choices, confidence, relationships, career decisions and where you live.

For Cindy, becoming debt-free represented freedom.

Her Attitude Toward Budgeting Changed

The young woman who once believed budgets were for losers was now using one every month.

She laughed about her old mindset.

I told her that she wasn’t a loser then and she wasn’t one now.
She simply learned something.

We all do.

Sometimes the best financial lessons come from mistakes we wish we had never made.

The important part is taking that experience and using it to make better decisions going forward.

I encouraged Cindy to share what she had learned with other young adults heading off to college or university.

One day she may even share the same lessons with her own children.

Cindy’s Top 3 Money Tips for Students

Before our conversation ended, I asked Cindy what three pieces of financial advice she would give to students heading to college or university.

Her answers were simple.

1. Use a Budget

This one probably isn’t surprising.

Cindy wished she had created a student budget before leaving home.

A budget can help students understand how much money they have available for tuition, housing, groceries, transportation, entertainment and everything else.

It can also help prevent unnecessary debt.

Even if you don’t have much money while you’re in school, learning how to manage what you do have is valuable.

The habit is often more important than the dollar amount.

2. Make a Financial Plan

Don’t simply assume everything will work itself out.

Plan as much as you can.

That doesn’t mean life will always follow the plan.
It won’t.

• Unexpected expenses happen.
• Jobs change.
• Cars break down.
• Rent increases.
• Plans change.

But having a financial plan means you’re better prepared when something doesn’t go as expected.

Think about where your money will come from, what your major expenses will be and how much debt you’re willing to take on.

Also think about what happens after graduation.

Student loans eventually need to be repaid.

3. Learn to Grocery Shop and Cook

Cindy said a large portion of her spending during university went toward eating out.

Restaurant meals, takeout, drinks and convenience food can add up quickly.

Learning a few inexpensive meals can save students a significant amount of money.

You don’t have to stop socializing with friends.

Look for a balance.

Cook at home most of the time.
Eat before going somewhere expensive.

Look for restaurant specials and discounts.

Invite friends over instead of always going out.

Learning to grocery shop and cook is one of those financial skills that can save money for the rest of your life.

Budgeting Isn’t About Winning or Losing

I like a happy ending to a debt story.

Cindy wasn’t debt-free when we spoke, but I still considered her story a positive one.

Why?

Because her mindset had changed.

She understood what had gone wrong and was actively doing something about it.

• She had a budget.
• She had a debt repayment plan.
• She had goals.

Most importantly, she had taken the first step.

There will always be people who think budgeting is unnecessary, restrictive or something only people struggling with money need to do.

That’s okay.

You don’t need to convince everyone else to manage money the way you do.

You only need a system that helps you reach your goals.

A budget isn’t a punishment.
It’s information.

It tells you what you can afford, where your money is going and what needs to change if your priorities aren’t being funded.

So no, living on a budget isn’t for losers.

There are no winners or losers when it comes to personal finance.

There are simply people learning how to make the most of the money they have.

Sometimes we make mistakes.
Sometimes we get it right.

And sometimes one financial mistake becomes the lesson that changes everything.

Did you ever think budgeting was unnecessary until something changed your mind?

What finally convinced you to start paying closer attention to your money?

Leave me your comments below.

Mr. CBB

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