Today, I'm going to cover a little topic that most people don't like to cover. Sounds fun right? Budgets can be good or bad depending on your perception of what comes with making or following one. Those of us who desire to plan ahead and be prepared love budgeting. It allows us to set goals and create a road map for our lives through our money. Those of us who like to "go with the flow," don't like budgeting at all. It's a limitation and restriction on the joys of life! However, if you really analyze the way you handle your money, you'll notice that it typically mirrors your priorities and your goals in life. I don't know many people who go out trying to spend their money on things they don't love unless it's tax time or you got another speeding ticket, I guess. (haha) Either way, when you consider this truth, it makes creating a budget easier. I'll explain why. Knowing your priorities and your goals allows you to create a vision for your money before you put pen to paper (or finger to keyboard). You'll know exactly where you want it to go. Someone with no priorities will simply wander through life throwing money at things and complaining that they never have anything to "show for it." I know because I've been there. With that in mind, let me go over some things that will help you figure out where you need to start with your budget and what you might need to eliminate.
First things first, do you currently save and give any money? As I mentioned before, Dave Ramsey goes over the importance of this repeatedly. He seems to have done something right with his money after he once had completely failed. I'd say that his advice on this has a lot of merit. He actually puts his saving and giving lines at the very top of his budget. In his professional opinion, you should pay yourself and others before you pay anyone else. This might be a strange concept to grasp because most of us get our bank account details pulled up, subtract our bills, and see what's left. He recommends doing the opposite. Set a saving and giving amount for each paycheck and pull that amount out of your check first. This not only forces you to live within your means, but it makes you more conscious of where the rest of your money is going. Now, some of you might be saying, I can't afford to do that. This is where you'll need to work on your financial situation as I'm doing now. I don't currently give very often, but I find ways to give money when I can afford to. Once I become debt free, I'll be able to increase my giving. Creating wealth can be a lot of fun, but you must give some of it away and be thankful for the fact that you have it. It really does lead to a more fulfilling life than being a Scrooge.
My next budgeting hack is one that involves another Dave Ramsey product. I know you're shocked. However, this is gold. He offers a new mobile app call EveryDollar. It is literally a budgeting tool built into your phone and allows you to track your budget and progress on demand. In today's age of new technology and cell phone mania, this is such an excellent product. I've used it myself and I can personally say that I enjoyed being able to see everything I'd included in my budget for that month, as well as seeing being able to track my spending. It eliminated the need for a lot of paper and math. I believe they still offer a free version of this app, but the version with the best capability is really the paid version. If you're able to afford to pay a subscription to help with your budget, I'd definitely check this out for the convenience that comes with it. The advertised price is $99 for a full year membership.
The last piece of advice I want to cover on budgeting is to be realistic. No one expects you to make a perfect budget and plan exactly what you spend every single month with zero error. Even Accountants for large firms estimate incorrectly. It's not an exact science. It is simply a road map to guide you in the direction you want to go. Where you end up will depend upon you as well as some uncontrollable circumstances at times. This is why we save our emergency fund. It helps us avoid those budget busting moments. Just remember that budgeting is just guessing and you can still have an impact on the final numbers with the way in which you live. If you set a budget of $100 on a category, try to spend $80. The goal is to plan ahead so that you don't ask yourself what happened to your money after you've blindly spent the last bit of it. It may take a few times to get the estimates right. Most people tend to repeat themselves on a regular basis so I honestly believe you can figure this out relatively quickly. Track your spending for a week or two and look for ways to cut back. This helps as well. Keep striving to spend less and save more. Building wealth takes time and isn't won by luck of the draw. If you're reading this and you're working on making smarter choices with your money, then you're on the right track to financial freedom. Hope everyone has a great Thursday.
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