The budget is where it’s at, folks. It’s Pillar #2– but it’s the most important cog in the machine, in my opinion. Having a healthy, functioning budget lays the framework to make the choices that ultimately make our financial lives either healthy or unhealthy.
From having been someone who was completely anti-budget for most of my adult life, I think I can understand some of the barriers to having one. Most of those barriers are due to problems with perspective, I think. Let’s break some of them down.
One misconception I had about budgeting was that it was complicated. Thinking it was complicated lead to me feeling overwhelmed about it. The truth of it is, though, that it’s not nearly as complicated as it seems.
Budgeting can be as simple (or as complex) as you want it to be. But whether it’s simple or not, what budgeting is at its core is a plan. It’s what we expect our financial lives to look like on a month-to-month basis. So, if you want to get started on your budget, download a copy of the Financial Wellness Suite. There’s an instruction tab in there to help you use it. But I’ll save you some of that reading and tell you how to use it here.
Once you have the Budget tab opened up, you just go line by line and you put in your expected income and expected expenses. Expected is the key word. We want to try and paint a picture for ourselves of what we think our financial life should look like every month. We’ll talk a lot more about how to deal with unexpected expenses once we hit Pillar #4: Savings in a couple more weeks.
You should really be using as much accurate data as you can, but if you have to guess at your numbers, guess low on your income and high on your expenses. If you do it in reverse, you might think you have a bigger cushion than you actually do. But, really, that’s about it. See how simple that is? Just sit down, punch in some numbers and see how your budget shapes up. And just like it says in the Instructions tab, if you are uncomfortable with either your end result of surplus/deficit or even the numbers you are assigning to your budget categories, ask yourself why you’re uncomfortable. Use that as an opportunity to learn about yourself. (Remember Pillar #1?)
Another hang up I used to have was that I thought living by a plan would take a lot of work. The truth is that it does take some work– but not nearly as much as you might think. And, frankly, you should be willing to accept some work, anyhow. You work so hard to earn your money– why throw that work away by not working just a little bit more to attend to your money? Here’s another house analogy for you: If you are working to make money but not working to manage it, it’s a little like putting up the studs and framing a wall for an add-on bedroom– but then not putting sheet rock up because that feels like “work.” It’s not more work; you just weren’t done with the job, yet.
We’ll talk more about that type of work very soon. In the Math & Discipline approach, the Budget is the Math and it informs us about the choices we need to make in order to maintain financial control (AKA, Discipline, which is coming up next week.)
Yet another hang up I had was that it takes time to sit down and deal with building a budget. Well, that’s true. It does take time. But it also took time to go get my car back out of the repo lot because I didn’t have a good plan in place to pay my loan. It took time to call and deal with the IRS because I didn’t have a good plan in place to set enough money aside to deal with my taxes. It took time to call the cable company to get them to turn the cable back on. See my point? It might take time– but it doesn’t take that much time; and it is time very well spent.
What are your hangups? Seriously. What is stopping your from taking the first steps to having a better financial life? Give me a call and let’s make an appointment and move beyond those barriers together. You’d be glad if you did.