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George Kamel, master financial coach at Ramsey Solutions, has a personality that divides budget-hating money experts. Maybe it’s because he got $40,000 in the hole, following the traditional American view that debt is, as he puts it, a “tool” and that college debt is positive. He then created a budget and was debt-free within 18 months.
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Ten years later, Kamel is a debt-free millionaire. Yes, he’s a fan. Here are five reasons why he says budgets work and those who hate them are completely wrong.
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budget is flexible
Many money experts claim that budgets are too restrictive and impossible to follow. Kamel strongly disagrees. Instead, he argued in a recent YouTube video on the subject that budgets are flexible as long as you respect the monthly totals you set. So, for example, if you find a great deal on the barbecue you’ve been looking for, but it’s not in your “backyard upgrade” budget, it’s perfectly fine to grab it. Just “steal” money from another budget category.
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Paying attention to how you spend your money is creating a budget
According to Kamel, many money experts advise against thinking too much about your budget. For example, creating too many “extremely narrow” categories is a waste of time. Create 10 categories, enter the numbers and move on, they say. Kamel disagrees. His point is that if you’re careful about how you spend your money, you win. That’s the essence of budgeting.
Making a budget won’t save you money
It’s probably true that if you create a budget and are careful about how you spend your money, you’ll be better able to save for things like retirement, vacations, and big-ticket items. But Kamel says that even if you automate your savings (for example, by setting a certain amount of money to be automatically deposited into your retirement account), that doesn’t mean you’re adhering to a budget. said. Saving for retirement should be just one category in a solid budget.
Budgeting is even more important for people with irregular income
One of the things Kamel has heard is that people with fluctuating and irregular incomes are unable to budget. But he insisted it was more important for them to budget than for people on regular incomes. His suggestion is to create what he calls a “prioritized spending plan.” This allows you to first create a budget for the minimum amount of money you earn per month to ensure that you can cover basic necessities such as food, shelter, utilities, and transportation. As more money comes in, you can cover the next set and the next set and so on.
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A different name than budget…
Kamel’s biggest pet peeve about financial experts denying budgets is when in fact all they usually do is advocate for a budget, but they use a different name for it. It means that it is. For example, in a recent video, he criticized a money expert who recommended creating a “spending plan” rather than a budget, but then went on to explain budget planning.
“Once again, you have people saying the budget is crap, this is what we should do instead. And then they start … explaining the budget,” Kamel pointed out. So whether it’s a budget, a spending plan, a dollar diet, as long as you’re doing it, that’s what really matters, Kamel said.
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This article originally appeared on GOBankingRates.com: George Kamel says money experts who believe budgets don’t work are wrong — here’s why
