Budgeting isn’t something you should feel ashamed of. It is not supposed to be boring, cheap or miserable! When you learn how to budget properly, you will be able to tell your money where you want it to go rather than having to ask yourself how did I lose all my money? This one habit can help put everything else into perspective. You’ll have lower stress levels, pay off debt quicker and have much more control over your finances than you ever thought possible.
Most people think they are budgeting but really aren’t doing that at all.
At some point in our lives, we find ourselves walking around with a mental checklist of what we have paid for: rent, phone bill and car insurance. This gives us an illusion of responsibility and being an adult, but that doesn’t mean you have created a budget for yourself. Instead, you’re living in survival mode only with a nicer name.
When you create a budget you will NOT track what you have already spent; you will NOT check your bank account and pray for the best; and you will decide in advance how to spend every dollar that comes into your wallet! That one significant difference will greatly impact how much control you feel over your financial life!
Most people don’t recognize that they haven’t actually planned their budget until well after the fact. They may, for example, feel like “good money managers” simply because they pay their bills, but one day, whether it be via an article or a podcast, they’ll come to that realization (that they have never actually accomplished budgeting).
There are many ways to budget. You could use a spreadsheet, or write everything down on a piece of paper, or find a free app to help you manage your budget, or use whatever method works for you at all. The most important part of budgeting is creating the habit of doing so. The goal of budgeting is very simple: write down the amount of money you will earn in the month, and before you have even received a paycheck, write down where each dollar will go.
Clearly, your income is the first thing to budget for.
Next, you will want to count how many pay periods you have in a month. Multiply that by what you normally earn each pay period, and that will give you your total of what your gross income will be. No need for estimates here…only the facts.
Next, your fixed expenses.
Fixed expenses include things like rent, loans, insurance, and your internet service. Fix expenditures do not have any options; therefore, it is easy to budget for these expenses because you know exactly what they will be.
Flexible expenses include groceries, gas, dining out, and so forth. Flexible expenses are where you can make the most decisions about how you spend your money because there are options for how you budget for them.
Once you recognize that budgeting is not just numbers, you’ll find budgeting can be a tool to take control of your financial situation.
The leftover funds in your budget give you the power to choose how to use those funds responsibly and without guilt. With this extra money, you can pay down your debts, create new savings accounts, or get a step closer to achieving an unfulfilled goal.
Instead, you might even find yourself able to confidently tell people “no” to things.
Because you aren’t broke. You are intentionally making choices about what you want to do with your money.
If someone invites you to dinner, you may feel guilty to say no because of the cost associated with going out to dinner, but you’ll keep yourself on a budget by saying no to that invitation.
If a new pair of shoes catches your eye and you want to buy them, you’ll say no because it isn’t in your budget.
Your “no” isn’t a negative; it’s you being protective of your resources.
Actually sticking to your budget isn’t an easy process. The hardest part about creating a budget is staying within that budget for an entire month. You may feel that simply watching videos about budgeting is enough. But, until you actually use what you’ve learned, nothing will change in your financial situation.
And, here’s the painful reality: many people won’t stick to their budgets.
They understand budgeting.
They agree with budgeting.
They will even discuss budgeting with their friends.
But they will NOT sit down and create their own budgets.
If you have committed to budgeting at least one time in your life, you will have taken the first real step toward financial freedom.
You will not achieve it overnight.
You will not magically achieve it.
You will achieve it permanently.
Because the moment you plan your money, you stop chasing it—and that changes everything.
