Can budgeting be the best short term investment you can make?

Aug 21, 2023
budgeting, investing, investing 101, david bach, get rich, learn to invest, prioritize investing, how to get rich, budget, budgets, where to start, debt free, how to get out of debt, how to start making money, how to save

Exploring Investment Philosophies: Debunking Myths and Finding Common Ground:

I was talking to a client I've been working with on and off for five years. She's done an amazing job of getting out of debt, tripling her income, putting money into a ROTH IRA, and saving for emergencies and her wedding, but when it came to additional investing, she's always been, frankly, disinterested. Suddenly she reaches out because she's ready. So naturally, I ask her why. And she admits that she is about to receive a large chunk of money, and before now, she felt like she couldn't even think about investing.

Navigating the realm of investments is a multi-faceted journey that encompasses more than just financial expertise; it can feel daunting, scary, and hard to know where to start. Investing requires you to discern between trustworthy individuals and get-rich-quick folks; the truth is, it's important to speak to many different people with many different views. While there's value in many investment strategies, the key to investing successfully it's essential to critically evaluate differing viewpoints to build a comprehensive approach that suits your financial goals and circumstances.

I read this article: 'Automatic Millionaire' Author David Bach Says Budgeting Is Not a Good Long-Term Financial Solution - Here's What To Do Instead 

The Value of Budgeting: A Short-Term Investment with Long-Term Benefits

And I decided to dive into why I think budgeting is actually the BEST short-term investment you can make. The article rightly emphasizes the significance of investing in relationships and financial teams. However, it presents an unconventional stance on budgeting, suggesting that it may hinder rather than aid financial success. Here's why I think budgeting offers several valuable advantages:

  1. Mindfulness in Spending: Creating and following a budget cultivates mindfulness around your spending habits. This awareness helps you make informed choices and allocate resources to align with your priorities.

  2. Understanding Emotional Spending: Budgeting unveils patterns of emotional spending, allowing you to recognize and address these behaviors. This self-awareness contributes to healthier financial decisions. And a more balanced, less stressful life.

  3. Setting Boundaries: Budgeting enables you to set clear financial boundaries, preventing overspending and encouraging responsible consumption. It helps you mainly create relationship boundaries; long are the days you get taken for on an unexpected $100 brunch. You are the driver in your own life.

  4. Burnout Prevention: By tracking expenses and having a clear spending plan, you reduce the risk of financial stress and burnout, fostering a healthier relationship with money.

  5. Prioritization: Budgeting empowers you to prioritize what truly matters, ensuring your resources are directed toward your goals and aspirations.

To name a few!

The Buy vs. Rent Dilemma: Considering Factors Beyond the Norm

Andrew Lisa the author of the article highlights that David Bach believes you should always buy your home. While the article advises favoring homeownership over renting, it's crucial to recognize that this decision isn't one-size-fits-all. Indeed, owning a home can be a valuable investment, but it's essential to consider various factors:

  1. Financial Capacity: Assess your financial situation thoroughly before committing to homeownership. Consider maintenance costs, interest rates, and the impact on your overall financial health.

  2. Flexibility: Renting provides flexibility, which can be advantageous for those who value mobility due to changing job circumstances or personal preferences.

  3. Market Conditions: Economic conditions and real estate trends play a significant role. Sometimes, renting might be more financially prudent in volatile markets.

  4. Diversification: Investing in real estate might not be the best option for everyone. Diversification across different asset classes should be considered.

Adding Depth to David Bach's Investment Philosophy:

  1. Budgeting as the Foundation: Budgeting is not an end in itself, but a powerful foundation that fosters financial stability. Just as an Olympic athlete trains tirelessly before their moment of glory, budgeting prepares you for larger financial risks and opportunities.

  2. Paying Yourself First: The concept of "paying yourself first" or prioritizing savings regardless of debt is a cornerstone of financial wisdom and our philosophy at Beyond The Green. It builds a safety net and encourages a habit of saving, even during challenging times.

Stay open while learning discernment:

The world of investments is nuanced, filled with diverse philosophies that cater to different circumstances. While the article introduces unconventional ideas, critically assessing and integrating these notions with your current realities needs. Yes, you might feel ready emotionally to start investing, but if you have a ton of credit card debt or are living paycheck to paycheck, then listening to someone like David Bach isn't going to help you. Budgeting remains a vital tool for cultivating financial mindfulness and stability. Likewise, buying or renting a home should consider personal finances, market conditions, and long-term goals. A well-rounded investment approach ultimately embraces multiple perspectives, prioritizing financial well-being and adaptability in a dynamic landscape.

Beyond The Basics: Our Glossary Of Financial Terms

We define the lingo you'll need to become a finance expert!

We hate SPAM. We will never sell your information, for any reason.