It doesn’t matter how much money you make, its always important to have a budget. Without determining the proper amount to save and spend each month, it can be easy to fall into credit card debt or incur other adverse financial penalties. For those who fluctuate in monthly expenditures, flexible budgeting can be a great solution but there are also some drawback to this practice.
Advantages of Flexible Budgeting
1. Seasonal Expenses
Winter coats cost more than swimsuits and you don’t take beach vacations in the fall. These are examples of seasonal expenses that do not recur throughout the year. Flexible budgeting can be used to adjust for these large purchases when they occur without requiring any adjustments in following months.
2. Irregular Earnings
Holiday bonuses often recognize a year of work but they also come at a convenient time. Many families have increased expenses at this time of year which is also why many employers choose to give out bonuses when they do. Flexible budgets incorporate these irregular payouts in a way that allows them to be used when the funds are most needed.
3. Less Stress, More Fun
Budgets are helpful but they can also become oppressive if an individual consistently cannot stay within the limits or passes on opportunities in order to save money. By designing a budget with flexibility in mind, you won’t find yourself stressed out at the end of every month or telling your friends you can’t join them all the time. Just be sure not to use it an excuse to lose the boundaries entirely.
Disadvantages of Flexible Budgeting
Budgets are simple because they provide one figure within which someone must remain. Flexible budgets require more planning in order to track expenses and adjust for any differences between periods. A range that changes over time can make the budgeting processing overly confusing for some users and therefore reduce the odds that they will successfully follow it.
2. Enables Cheating
The rules of a traditional budget are straightforward: don’t spend more than the limit. Flexible budgets complicate things by include more rules that can easily be bent or broken by someone who is struggling to stay within the boundaries.
3. Less Discipline
The whole point of a flexible budget is to make it easier to adhere to, however, by not following the same rigid program every month, such systems are unlikely to foster the same discipline or long term habits as more traditional alternatives.
Natalie Regoli is a child of God, devoted wife, and mother of two boys. She has a Masters Degree in Law from The University of Texas. Natalie has been published in several national journals and has been practicing law for 18 years.