“the five golden rules of budgeting”
I knew a person who used to change his Budget on a weekly basis. Let’s pretend his name was Bob. Bob bragged about always staying within his budget but, unbeknownst to his audience, he was a serial budget-changer. If he couldn’t make a purchase fit into the budget he originally planned, he’d shuffle things around from a different budget to make it fit. Sometimes, Bob would sell something and spend the proceeds on whatever he wanted like it was free money and he never counted whatever he spent it on as expenditures for his budget. Doesn’t that defeat the whole purpose?
If you’re like Bob and you can’t stick to the budget you originally set, why even have one in the first place? Finding little tricks and loopholes are crafty, maybe even genius, but you’re cheating yourself in the end. By shuffling things around, you aren’t exercising your self control and the lack of will power is why your budget will eventually fail. If you’re trying to stick to a budget as a New Year’s Resolution, let’s go over five golden rules to gear you up for success:
1. Be Honest
What you think you spend on food, drinks, shopping and entertainment is most likely way out of touch with reality and it’s totally normal. You probably know it, but you don’t know the extent of it and you might turn a blind eye to the actual amount because knowing the exact figure could be a major buzz kill. Unfortunately, you’re going to have to face the cold hard truth about how much you actually spend so you’ll have purpose and motivation behind the changes you’ll be making. If you don’t have an app like mint that tracks your expenditures, take some time to go through your last 3-6 months of bank and visa statements. Categorize all of your expenditures and add up all the totals for those months. You might be in for a huge wake-up call.
2. Be Realistic
Setting a budget way too low is setting yourself up for failure. Once you’ve looked at the trends of your past few months of expenditures, first figure out what categories need the most improvement. Before setting a new monthly figure for those categories, make sure you’ve planned how you’re going to cut back so that you know it’s possible. For example, if you’re spending $500 a month on going out to eat, you can’t just cut it in half and say you’ll buy groceries instead, because what if your groceries end up costing more per month? Make cutbacks that are uncomfortable, but not impossible.
3. Learn the Difference between Want and Need
You need to eat, but you don’t need to eat wagyu beef steak and truffle mashed potatoes. You want to, but you don’t need to. You need to be clothed, but you don’t need to buy a new outfit every three days. See the difference yet? Stop convincing yourself that you need the things you actually just want.
4. Be Consistent
Aside from maybe a bit of trial and error in the first couple of months, DO NOT EVER CHANGE YOUR BUDGET. FOR ANY REASON. If it is well thought out and meticulously planned, you won’t have to. It’s a slippery slope after you cheat on your budget, even if its just a little bit.
5. Expect the Unexpected
Some people try to turn a blind eye to some of their expenditures, or make excuses like “it was the holidays” or “it was birthday season” or “a moth ate my entire closet” or “this sale will never come again”. Actually darling, the holidays and birthdays come every year, and sales happen more often than you make yourself believe. In a proper budget, you’ll set aside money for even the rare occurrences. Birthday and holiday gifts, repairs and maintenance, speeding tickets and vegas stagettes are all things that don’t happen regularly, but should still be counted in the budget. Setting aside a gift, travel or emergency fund could cover most of these “surprise” expenditures.
Make good decisions, people! Until next week \\//