The number of people that use a budget has increased up to 82% during 2017, which is an improvement from previous years. That means that only 18% do not do that, which we think is a fairly decent number. There was a survey completed by Bankrate’s that not only covered budgeting but also looked into the number of Americans that have some form of savings, and this is where that data originated from.
The goods news is that the percentage of people budgeting on a monthly basis has increased according to the Money Pulse survey. It is up double digit percentages from other surveys that have been completed in the 2010s. So this is a pretty significant, positive development. But more improvement can be done, especially with the method of budgeting being used.
Now there are many different ways to complete a budget. Some individuals are much more detailed than others. There are examples of people going down to every single expense made throughout the course of the month, even down to a coffee bought at a local store. Some people just budget using broad categories, such as “food” budget or “meals not eaten at home”. Therefore it is very likely that comparing one person’s budget to another will show many different ways of doing it.
In fact, Moneypulse reports that 40 to 50% of Americans that budget do so in their head! Now we are not exactly sure how that is done, or whether it is effective or not, but we guess this is one way to do it. But it would be way down our list of recommended approaches.
One of the keys to creating a budget though is to do what you are comfortable with and what you will adhere too. So if you think you are more likely to live by high level descriptors, then do that. If you think having tons of detail is too overwhelming, and maybe you would not budget, then do not go down that path. Do what you are comfortable with, as 82% of Americans are currently doing.
Bankrate Money Pulse also discussed emergency savings. As when you create a budget, there should be some type of line item for unexpected expenses, such as car repair, medical bills, etc. Add money to this category each month, and that will slowly but steadily build up your savings. If you do not budget for a potential emergency, then one, large unexpected bill can cause a major hardship.
The reason to account for emergencies is the following tidbit of data. The Bankrate Money Pulse 2017 survey indicated that less than 40% of American households can pay some type of emergency bill. Now if these people just pro-actively planned for a crisis, maybe they would not be in that situation. Therefore we always recommend that these 82% of Americans that budget, set aside a little money each month for some type of future crisis. As an emergency will happen sometime….maybe next month or next year. But have the money saved for it.
Take this time to create a budget! And try not to do it in your head. Follow the ever increasing trends of Americans that are planning how they are spending their hard earned income month in and month out.