Better Understand Your Budget
We love to hate budgets. It can be annoying to do them, we always forget to add things, and they’re nearly unrecognizable at the end of the month. The problem with avoiding doing a budget, or doing it poorly, is that all budgets really do is acknowledge reality. We’re going to spend money, it’s just a question of how we’re going to do it. Regardless of how successful you are at staying on budget, the fact remains that ultimately you have to balance your budget, or suffer the consequences.
In order to successfully balance your budget, you must first create one. Allocate available cash to your needs, and then to your wants. That part is simple. The hard part is going to be changing how you view your budget.
Where you start isn’t where you finish. This could work either in your favor or against you. At the end of the month, you’ll have some categories with money left over. You can then roll that money forward in the same category for next month, or you can reallocate it towards your current major financial goal. This principle works against you when you overspend and then have to either cut back next month or go into debt. Which brings us to our next point.
Your budget is a living document. You (hopefully) set your budget a few days before the month begins. When you get to the end of the budgeted month, your budget will have changed in some way. You’ll overspend in one area, a bill will come in lower than expected, or some form of emergency will have come up. There’s a reason why we don’t use stone tablets for recording our budgets… they change! Change is ok, as long as at the end of the day you’re still being an adult and your obligations are being met.
Good budgeting requires practice and continued good budgeting requires discipline. Your first few written budgets will be wrong. Expect lots of corrections and additions as you forget things that you can’t believe you forgot. The key to ongoing good budgeting is to have discipline. That means saying no to yourself today so that you can reach your financial goals and then say yes to yourself later. It also means that you keep budgeting every month.
The budget is your plan to get the things you want while still having the things you need. Make it your friend, understand it, and stick with it!