The budget has never been a term I enjoyed. It has grown to be as repulsive as the word “diet.” A budget is perceived by some as a spending plan that involves unnatural sacrifice and unhappiness.
I favor taking a different approach.
Have you ever observed how little kids act when they eventually possess money that they consider to be truly theirs? When you enter a store, you may be asked to buy things for them as you stroll around. Want. Want. Want….When told they may pay for it with their own money, however, many of those kids will hesitate, consider what it is worth, and frequently decide they would rather keep their money than part with it for something less important.
They just adore having money. Having money is more enjoyable than trading it for something less desirable and enjoyable. If you can keep this perspective on money as an adult, you’ll be content and successful. Some of us lose the joy of wealth at some point in our lives. Unfortunately, some of us come to believe that money in the bank is meaningless until we exchange it for something purchased from a store. Keep in mind that the wealthy are wealthy because they invest in assets that appreciate the value
and save money. The reason why the poor are poor is that they spend all of their money on items that lose value.
The first step in learning how to manage your money is to add up. All of the monthly income we receive. How much actual monthly income do you truly have? Do you know how much that is? Great. Let’s refer to this sum as “A.”The next step is to calculate our monthly fixed regular expenses. Things that remain constant month after month. These include mortgage or rent payments, insurance, auto loans, cell phone bills, gym dues, Netflix, cable TV, and bank fees. Find it all out. To locate everything you regularly pay each month, look through your bank and credit card statements. Is the payment sufficient for your needs? Do you need 120 TV channels if you only watch 10 of them? Do you have unused data on your phone that you’re paying for? I was. Change your plan if you agree. Paying for something you won’t utilize is not necessary. Stop making payments if you stop going to the gym.
Add it all up, and the result is “B.” Calculate “A” – “B” to get “C.”
Let’s now examine your consistent yet varied outgoings. While you might incur these costs every month, they can change from month to month. These include things like food, gas, clothing, housing expenses,
haircuts, dining out, etc. Do you know how much you usually spend each month on groceries? How much do you spend each month on gas? Successful people are aware of these sums. Establish monthly goals.
Eating out is one of the biggest murderers of bank accounts. I would rather see money wasted on eating out too frequently than have your shopping bill be a little higher. A reward is eating out. A delight. Not something you do since you’re too lazy to prepare food. Create a meal plan. Make food
that you like to eat. Make home cooking enjoyable and diverse.
Your estimated regular but diverse expenses should total “D” when added up.
Try your math. “C” – “D” = “E”
What does “E” stand for?
Is the value positive or negative?
We haven’t even discussed unusual expenses, so it better be a positive value. Though it is a modest number, many people can have positive values for “E.” They are depleted of funds. I refer to this as treading water. You can simply maintain your head above the water, but this won’t get you very far. Your feet won’t be able to touch the ground if you also have debt.
You are at risk.
The financial swells known as irregular expenses arrive when we least expect them. Auto repairs home renovations losing a job Breakup from a relationship. When the waves hit, it will be more serious if we are treading water above our heads. Certain waves can be challenging, regrettable, but controllable. You choke a little after swallowing some water, but you can resume treading water. But then a big wave comes. When it strikes, we are submerged. We are unable to reach the bottom due to debt. We have
severe financial problems. We’re sinking.
To put our feet back on the ground and move on a constructive path, we
need to create a plan and goals.
