The Dreaded BUDGET

10 Mar The Dreaded BUDGET


How to make a budget that works for you.
Many people struggle with the mechanics of creating a budget that actually works. In fact, according to Bankrate.com, some 40% of American families annually spend more than they earn. Some people are afraid of doing a budget because they think it will restrict them and reduce their quality of life. The truth is that doing a written budget that works actually frees up quality of life and gives you control of your money. How would it feel to make things happen with your money instead of waiting for your money to happen to you?

The most important part of making a budget (or cash flow plan) is writing it down on paper every month. Before the next month begins, write down what your income will be for that month. Then go through and spend every dollar on paper for that month. Give every dollar a name until you have no money left. When you are done, there should be no money left over. Add up your income sources, subtract your expenses, and you should get zero. This is called a Zero-Based Budget. Congratulations, you now have a written plan!

Make sure you do your budget each month with an accountability partner. For many of you this will be your spouse. For singles, it will be a close friend. The accountability partner is like a workout partner that keeps you going to the gym when you don’t feel like working out. It’s an important part of staying on track financially.

It’s ok to be wrong at first. If you’ve never done a written budget before, chances are it will take you a few months to get it right. When you get halfway through the month and you are close to overspending in a category, have an emergency meeting with your accountability partner to re-allocate money from a different category. This will probably happen several times in the first few months. Don’t give up! Learn from your mistakes and apply the lessons learned to the next month’s budget.

While it’s not the easiest thing to start doing, the important thing is to start doing it! The journey to financial success starts with the first step. Don’t let FEAR (False Evidence Appearing Real) paralyze you. Look past the fear, gather the energy, and take the first step.

– Matt Wegner

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