I Make Plenty of Money—Why Would I Need a Budget?

"I make plenty of money. I don't need a budget." This is a phrase I've heard more than once. When I hear this, I know that person does not understand what a budget is. True budgeting is not about restricting your spending, it's about making intentional financial choices. In a 2022 Lending Club report, we see that even high earners - earning over $100,000 - are living paycheck to paycheck, which means if they were to miss a paycheck, they wouldn't be able to keep up their lifestyle. Instead of thinking of a budget as something that is restrictive and a joy-killer, think of it as just having a plan for your spending. Instead of a budget, let's call it a spending plan.
​Lifestyle Creep Is Real
Earning more money is great, but typically when we earn more, we spend more - lifestyle creep is real. When one of my clients was working as an executive officer for a tech company, he noticed that all the other officers drove fancy expensive cars. He was even teased by the other officers about the simple, basic car he drove, calling it a teenager car. When it came down to it, could he afford to buy whatever car he might want? Yes. Was it part of his overall spending plan? No. He knew what he wanted his money to do, and buying a fancy car to impress others wasn't it. Having a spending plan helps prevent the creep.
High Income Doesn't Equal Wealth
​There's a difference between your income and your net worth. Your net worth is all of your assets minus your liabilities. If you have taken on a lot of debt because you can "afford the payments," that can hurt your net worth. Living paycheck to paycheck to pay for your lifestyle doesn't allow much room for saving and increasing your net worth. Having a spending plan allows you to ensure money is being allocated toward building wealth, not just funding lifestyle upgrades. Even with a high income, your ability to weather financial storms can be compromised if you’re not saving or investing strategically.
​Unexpected Expenses & Lifestyle Changes
 Even high-earners, especially in our current climate, face financial surprises -- job loss, economic downturns, family emergencies, and so much more can adversely affect our finances. Having a priorities-driven spending plan in place, ensures you are ready when those surprises happen. Not only can you prepare yourself for surprises, you can prepare yourself to walk away from the grind and live your dream life (if that's what you want). Taking charge of your finances gives you choices.
​Aligning Spending with Priorities
​More income can give us more opportunities to be intentional with our spending. Having a plan in place ensures our money is going toward what truly matters -- travel, philanthropy, investments, family experiences, or whatever your spendful heart desires. Without a plan, you don't have the same confidence -- knowing you can spend and still pay for the necessities. A clear spending plan doesn’t just keep you from overspending -- it helps you make decisions that truly align with your life’s values and goals.
​Conclusion
​Again, we are not talking about restricting your spending, we are talking about the freedom to do the things you want to do with your money. Don't just let all that hard-earned money blindly fall through your fingers. Give it a try for just one month. Make a plan for where you want your money to go, track where your money goes, and see how it changes your confidence, your savings, and your ability to live the life you truly want.