The purpose of a budget
To help you better understand where I think budgets fit into your life, I want you to imagine your journey to get out of debt as a road trip. You’re the driver, and it’s up to you to get us where we need to go.
Most people, when I use this analogy, want to think of the budget as the front windshield. They think that it shows us where we’re going. I would argue that it’s just the opposite; it’s a rearview mirror. A good budget shows us where we’ve been, as much or more than where we need to go.
Most successful budgets are not built on speculation about what you will spend. Rather, they’re built on a thorough knowledge of what your past spending habits are. From there, you often kick yourself and swear to make changes. In your journey to get out of debt, I want you to imagine budgets as a hindsight tool. They’re not the front windshield, and they’re not their steering wheel.