The dreaded B-word!!! We all talk about being on a budget, but talk and action are often two different things. A budget is a spending plan. You plan how you will spend your money, before you spend it. Give every dollar of income a name, on paper, on purpose. I do this on a monthly basis. No two months are exactly the same income or expenses. I take each months income and spend it down a spreadsheet into categories. Many are the same month to month, but others are different each month. The key is to spend every dollar, every month. Even if one of your categories is for splurges. Put splurge in the budget and therefore at least admit it.
Most people see a budget as constraining. This is because they are doing it wrong. An actual working budget is freeing. For instance, I know when I go to the grocery and spend out of the grocery budget that every other expense for that month is covered. That frees me to spend out of that category on groceries. I have planned ahead for all my expenses. This eliminates worry over getting all the bills payed. This planning ahead is the key. The first month you do a budget for your household it will fail. You will have forgotten something. In that situation you pull money from one category to pay the other and next month you don’t forget. After about 3-4 months of this it will start to work.
The best way to stay on course with a budget is to use cash envelopes for the categories that you spend when you are not at home. I have used envelopes for groceries, entertainment, clothing, household items. There is no right or wrong here, you pick your categories and envelopes. If you would like to see a sample excel budget I have one on my website (click the link on the right column of this page to see my website), based on Dave Ramsey’s plan from his course Financial Peace University.
A famous person once said, “Tell your money where to go, instead of wondering where it went.”
The plans of the diligent lead to profit as surely as haste leads to poverty.
Ants are creatures of little strength, yet they store up their food in the summer.
Suppose one of you wants to build a tower. Will he not first sit down and estimate the cost to see if he has enough money to complete it? For if he lays the foundation and is not able to finish it, everyone who sees it will ridicule him, saying, ‘This fellow began to build and was not able to finish.’
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