Overcome Budgeting Obstacles
July 9, 2009

We have all heard the old quote: “Success is a journey, not a destination”. This definitely applies to budgeting. When we teach people how to budget, our team often gets the same question … “I have tried to budget in the past, but it didn’t work. What am I doing wrong?” Many people have tried different types of budgeting techniques, only to abandon them quickly.

Use discipline. A budget does mean prioritizing your spending. For some, this is very difficult at first. You will find that it gets easier as you do it often. When you find yourself tempted to purchase something you don’t necessarily need, but you decide against buying it and instead pad your emergency savings account, you will have succeeded with this step.

Be patient. Just like a diet, don’t expect to get it right the first time. Setbacks are normal. I recommend that you set up a monthly budget, and create a spending plan for each week of that month. If you find that you can’t stick to it weekly, then create a daily plan. Click here for these resources, or click on the resource tab of this blog.

Play as a team. If you are married, then expect the process to take longer than if you were single. You each have your own spending personalities and needs that will affect your decisions. With a new household budget, you should have weekly meetings to discuss the budget. This may seem like a lot, but it is important to get into the habit. Once you find that your budget runs on auto pilot, fewer meetings are needed.

Depending on the goals and objectives you set, your journey will actually not end for many years. Managing your finances is a lifelong commitment. Remember to enjoy it, keeping your eyes on the horizon because, believe it or not, you will get there. It may not be easy, but (get ready for another cliche) … nothing worth having ever is.

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Start A Budget
July 7, 2009

At Essential Knowledge, we actually don’t use the word “budget”. We think spending plan is more appropriate. It seems less confining, and more empowering. Whichever term you use, the result is the same. A budget is a plan for your money. And the amount of money you have is not important  whether your bank account has millions of dollars or tens of dollars, having a workable solution for spending is critical.

How do I start? Well, you can’t know where you are going, unless you know where you have been. You can do this one of two ways … you can start tracking your expenses for thirty days; or, you can pull up your most recent bank history online, and do a thirty day review. Use this expense worksheet for free. List every expense in the right category. Total each category to see your total spending. You probably know the exact amount of your car payment and housing, but you will probably be surprised what you spent in other areas.

Does your income exceed your expenses? This seems like a silly question, but it is vital. If it does not exceed your expenses, then you are probably using credit to cover the difference. Your immediate goal should be to cut your expenses in order to cash flow each month.

If your income does exceed your expenses, then decide what you want to accomplish. Do you want to save more money? Do you want to be more disciplined each month? Are you starting a retirement account, or adding to one? Determine what you want to save each month, based on the goal.

Evaluate your spending. You will see some things that you absolutely need, such as food, healthcare, housing and transportation. You will also see things that you just wanted, such as 150 channels of digital cable. The key is to find what you really need, and compare that to what you really want. Obviously, you need to eat, and have a roof over your head. But, could you live somewhere less expensive, or take your lunch to work?

Start with the easy things. Accomplishing small steps is satisfying and will motivate you to do more.

Each month, look for ways to save money in your budget. You will be amazed what you can do, regardless of your monthly income. Check back with me, too, for other ways to save.