Americans are widely known for being poor savers, as consumer spending accounts for more than two-thirds of the overall economy. Stagnant wages and higher living expenses are partly responsible, but many people may not be saving money because they lack a basic understanding of a budget.
Budgeting often comes with a negative connotation. A recent poll conducted by the National Foundation for Credit Counseling found that 57 percent of respondents misunderstood the purpose of a budget. Instead of viewing a budget as a responsible way to identify financial waste, people consider it a restriction on their spending.
“A budget actually provides the structure through which a person can be in charge of his or her spending, directing the dollars to their best use,” said Gail Cunningham, a spokeswoman for the NFCC. “Spending should be a reflection of a person’s priorities, but without a plan, the priorities often get pushed aside in favor of the tyranny of the urgent.”