Consumers are confused about the purpose of a household budget.

That was the main finding of an informal online poll recently conducted by the National Foundation for Credit Counseling, or NFCC, a nonprofit credit counseling organization in Washington, D.C. The poll was conducted June 1-30, 2013, and was answered by 793 people.

Fifty-seven percent of the respondents said they considered a monthly budget to be a restriction on how they spend their money.

But in fact, a budget allows consumers to spend their money in ways they’ve chosen, the NFCC said. Only 43 percent of the respondents selected that answer.

In a statement, NFCC spokesperson Gail Cunningham explained that a proper budget provides structure through which consumers can be in charge of their spending and direct their dollars to their best use.

“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,” Cunningham said.

Being reluctant to make a budget suggests people might be afraid to face financial facts, choosing instead to allow the most pressing need or want of the moment to make the decision for them.

According to the NFCC, a budget:

  • Creates a thoughtful awareness of spending.
  • Relieves financial stress.
  • Improves financial security.
  • Helps structure a plan for the future, including planning for large purchases.
  • Assists in meeting financial goals.
  • Frees up money for savings, investment or debt repayment.
  • Allows preparation for emergencies.

Instead of being restrictive, a budget can create a perception of having more money through smart spending, saving and investing choices.

“It’s a shame that budgeting has a negative connotation,” Cunningham said. “When every penny counts, it’s important to count every penny.”

The first step in making a budget is to track your spending for at least one month. A free budget worksheet can be found on the NFCC website.

Do you have a budget? Does it help to free up money to put in your savings account?

Follow me on Twitter: @marciegeff.

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