There are as many opinions about budgeting as there are about politics or religion. However, opinions are just that — opinions. Until you put your opinion to the test, you won’t know if it simply is a personal preference or something based on truth and facts. The same is true for a budget. Most adults have heard about budgeting and perhaps have experience with a budget at work. Perhaps your friends, parents or banker told you that you need one; maybe you have even tried budgeting and because you were unsuccessful declared budgeting to be a hoax, something untrue and unworkable. If you find yourself in one of these categories I encourage you to give budgeting a try or another try. Setting up your initial budget takes work, and keeping a budget requires self-discipline and some flexibility.
Here are a few tips to help you along in the process.
ANALYZE
Sit down and look at where you are financially and be real about what actions you took that brought you to where you are. Do you want to stay where you are financially? If so, stay on your current path. If not, then now is the time to make a real plan and make a change. If you don’t change your actions, you can’t expect different results.
SET GOALS
What are your near-term and long-term priorities? Why are those your priorities? Are they wants, needs or dreams? Make a list and rate each item’s importance. Be real about the steps you must take to reach them and get started. Don’t overload yourself, but don’t sell yourself short.
KNOW WHERE YOUR MONEY IS
Figure out what is coming in and going out. This is part of the hard work. If you do not have a budget, or yours is not working, keep a written account of every penny you spend and earn for the next 30 days, including deductions from your paycheck.
REVIEW EXPENDITURES
When we don’t track and review our expenditures, we can’t adjust them. Total every spending category. Adjust your spending so you can do what really matters to you.
LIVE BELOW YOUR MEANS
Just because you have the money does not mean you should spend it. A good rule is the 10-10-80 principle. As a Christian, I believe that 10 percent of my gross earnings should go to support my local church. The next 10 percent should go toward savings, an emergency fund and planning now for retirement. The remaining 80 percent is yours to spend to fund your needs, desires, and dreams.
SET A BUDGET
Many apps and online tools are available to help, as well as the old-fashioned spreadsheet. Do some research and find the one that works for you. Review and adjust your budget periodically to be sure it still is helping you meet your goals.
CUT YOURSELF SOME SLACK
Like a diet, if you never give yourself an occasional cheat day, you may not be able to endure for the long haul. Set yourself up for success!
Budgeting done right benefits you now and in the long term.
