Have you ever driven anywhere and completely disregarded the instrument gauge on your dash? Not once bothering to see if your tank is full of gas, or if your headlights are on, or how fast you are going! Probably never! If you did drive like this, do you suppose that it might be stressful with potential to leave you frustrated and stranded in the middle of nowhere? Even moreso, you could pose a huge danger to yourself and others! Living life without tracking your hard earning dollars is exactly like this. It’s RECKLESS!!!
A budget is your personal plan on how to control your most powerful wealth building tool, your income! A budget is your gauge that gives you constant information on your spending and saving for the period. Most people budget once a month (at the beginning of the month), but some people budget week to week. Either method will work for you, as long as you’re doing one consistently and beginning your budget before the period starts is key! Otherwise you’re just tracking your spending after the fact and you can just do that by logging into online banking… the difference is you need to be proactive!! After the money’s gone, it’s too late to tell it where to go!
There are many different budget formats. If you’re a spreadsheet nerd like me, you love to crunch numbers and know how to copy your sheets to the next month, so Microsoft Excel format works best! But if you prefer a fancier interface, you can use your online banking budget tool, or you can go to one of many websites like Every Dollar, or Mint. And if you’re super old school, a paper budget found online can be used as well! No one way works best for everyone, so be sure to find a method that works best for you and your spouse (if you’re married)!! Being consistent is key.
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I highly recommend that you and your spouse sit down together to go over the budget! Money is one of the most important elements to a relationship that it’s critical that both of you share the same vision and financial goals. If only one of you is on board with your budget and the other is spending all of your hard earned money, eventually there will be conflict.
Budgeting isn’t meant to be stressful or tedious, it’s meant to bring awareness to your spending and saving, which should be interesting, right?! Make it FUN! Enjoy a glass of wine or have a beer and turn budgeting into a date night. If one of you happens to be more savvy with spreadsheets then let that person take responsibility for that portion of the budget. It’s simple… it shouldn’t be seen as a chore, but rather a dashboard for your success.
Moving towards your goals starts with a plan!
A budget is your monthly plan which includes everything from giving/donations, to housing costs, recreation, insurance, etc. It also factors in all of your short term and long term investments/savings, and emergency funds. If you’re using a budget, you know if you’re saving money each month or losing it, how much, and exactly where it is going! It becomes almost like a game once the month is over! You get to see how much you’ve saved and how successful you were!!
What is YOUR current goal? Is it to stop going into debt every month? Is it to start an emergency fund? Is it to save for school? Are you trying to pay off the mortgage? Or perhaps you’re almost financially independent and only have a few more years left until retirement? Whatever your goal is, budgeting will always help you hit your goals! Gaining and keeping control of your income increases your chances for financial independence! Becoming financially responsible isn’t difficult, it requires discipline, and a steadfast approach. 80% of your success will come from what you do as opposed to how much you know!!
If you’re not budgeting, what are you waiting for?!!! Start one right now! Get on the road to FI now and don’t wait another day to gain focus towards your goals! I’ll send you my free monthly spreadsheet when you sign up for my blog post email updates. It’s my gift to you…
RAFI
