Nobody likes a budget. “Budget” isn’t even a good word, it doesn’t roll off the tongue, it’s got all sorts of negative connotations and it can come with guilt. Why am I writing about budgets then? For all of that, a budget is a great tool.
Your biggest asset is your future income. Not convinced? Just multiply your salary by 10 to see what you’ll earn in the next decade. Pretty impressive isn’t it? That’s a lot of money, it’s worth using it wisely.
Why a budget?
If you are going to work the hours you do, under the pressure you do, it’s worth making sure you get the most out of it for you and your family.
The better use you make of your income now, the easier it gets later. Get it right now and you end up with more. More financial certainty and security. You end up with a better retirement (or an earlier one), perhaps it’s your dream home or more frequent travel – more of whatever it is you want your money to do for you.
There are no quick wins with budgeting. It’s not a one off click of the fingers. It’s about incremental improvement, week by week, month by month. It’s not quick, but it’s not hard, it is doable, particularly if you follow the steps below. The hard work makes it that much sweeter when you succeed.
You’re in? Great.
What do you need to do now?
- Decide where you’re going to spend your money. Before it arrives. That’s all a budget is.
A budget allows you to control your money, harness it and cut out the waste. Cutting waste is important because wasting your money gets you the same result as being at work and not getting paid.
2. Make it accurate and realistic
Remember to include some enjoyment in there – if there’s no fun in the budget it’s going to fail. Remember that you deserve the good stuff, holidays, toys it’s a big part of why we work.
3. Monitor and review
Keep on top of it to make sure it’s working. Check at regular intervals to make sure you’re on track. If so, keep it up. If not, be flexible but remember you may need to adjust your goals or tighten that spending.
View a budget as a tool to help you get ahead.
Break it down
Break that big tough goal into smaller pieces.
Instead of a 5-year goal, try a 1-year goal. Knock over the 1-year goal and repeat it 4 more times.
If that still feels a bit too big, break up the 1 year goal into 12 smaller pieces and knock them over 1 month at a time.
When that’s done, it’s 1 down, bring on the next one. When you look back in 12 months it won’t feel nearly so daunting, perhaps it wasn’t quite so tough.
Have a look at your habits, the stuff you spend on autopilot – are you spending your money on things you value? Nobody gets a budget right the first time, be flexible because it will change over time. Fine-tune your spending until it reaches the balance that’s right for you.
If it seems tough, remember the reason you’re using your budget as a tool is to save more and use those savings to hit your goals. Those goals mean more certainty for your family, more choices, a better quality of life.
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