Planning is everything! And, in today’s world, achieving success without up-front planning is rare—very rare. Achieving success with your personal finances is no different. While some manage to sneak by for months without sound planning and budgeting, their failure to plan inevitably comes back to bite them where it hurts—the pocket book. So why budget? Plain and simple, your financial wellness depends on it.
While managing personal finances can be tricky, it’s not nearly as complicated as we may think. While corporate giants are forced to deal with massive spread sheets containing endless columns of numbers, the average person usually needs only two columns: “Money Comin’ In” & “Money Goin’ Out.”
What are the barriers to budgeting?
There are many things that keep us from budgeting—time, confusion, and commitment, just to name a few. At one time or another, most of us have started a budget, but somewhere along the way we failed to maintain it. With that said, it’s not hard to understand why the number one reason adults fail to budget is because of past budgeting failures. In otherwords, we fail once or twice and then give up altogether. Hence, the number one rule of budgeting: “temporary lapses in budgeting are just that—temporary!” Remember at all costs, if you fail to budget one day, live to budget another.
How long will I have to keep budgeting?
The benefits of budgeting last only as long as your budget is maintained. In order to keep on top of your financial life, you’ll have to get in the habit of sitting down to do the budget. It’s important to remember that budgeting doesn’t have to be a job you “clock in” for—if you budget on a frequent basis, it can take as little as 10 minutes a week. Getting started is the hardest—and most time consuming—part. So once you put in the effort, make sure you stick to it.
How do I get started?
- Save all of your income and expense receipts for one month.
- Enter the dollar amounts on the corresponding lines in a budgeting worksheet. (see The Spending Plan)
- Calculate your monthly “bottom line.”
- Reflect carefully on what you see.
- Answer the following questions:
- Where can you save more?
- Where can you spend less?
- What expenses can you live without?
- Make it happen—remember the key to financial planning is spending less than what you make.