Here are some thoughts from the book The Net Worth Workout: A Powerful Program for a Lifetime of Financial Fitness
Just as being aware of what you eat is the first step to controlling your diet, being aware of exactly what you spend is the first step to taking control of your expenses. You'd be surprised how little people actually know about their spending habits. I often hear clients say things like "I don't need much, " or, "Aside from necessities, I really don't spend at all." Then, when I question them more closely, I discover that they spend much more money than they think, and that a very large proportion of their spending is for nonessentials.
How true!
How can anyone make any sort of meaningful financial progress without a budget, spending plan or whatever you want to call it? Certainly some people do live and do "ok" without a budget, but are they really making the most of their money? I don't think so.
We've had a budget for our entire married life (15 years) and we've tracked our expenditures by Quicken for 7-10 years or so now. Doing so has helped us plan, make decisions, adjust to unexpected circumstances and control our spending. I consider having and using a budget to be one of the cornerstones to growing your net worth.
For more thoughts on budgeting, see It's Budgeting Time of the Year. It has several useful links to some of my top budgeting posts.
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