We’ve all been there before. Not knowing if you can actually afford what your about to buy. I mean, that’s what credit cards are for, right? Wrong. **enters gif of President Trump yelling ‘wrong!’**. However, this isn’t how life should be. Living paycheck to paycheck will make you lose hair faster than my friend John. And that’s fast.
Budgeting has become such a taboo word since something like 50% of divorces are due to finances. I could probably find that stat in a really good article to boost my credibility, but I’m just gonna go with my gut on this one. I hope I’m right. Money is emotional and learning to control your emotions around money is critical.
The key to ‘budgeting’ is to find whatever works for you. This actually means having something in place in your life that allows you to take control of your money. My wife and I have a ‘budget’, but merely use it to track expenses so we can see where we can cut back. While we don’t stop buying groceries if we’ve gone over for the month, we consciously use that data to check ourselves at the grocery store the next month.
By budgeting, you are allowing yourself to live the life you always dreamed of without going into debt. You also learn a little about delayed gratification in the process. However, if you don’t know where to get started, follow these steps:
- Just start tracking your expenses
Seriously, all I’m asking you to do is track your expenses for a month. You can use budgeting services like YNAB or Mint, or even just import your credit card data into excel and sort that way. Whatever it is, make sure you know where every single dollar went that month. Travel savings, new pair of work pants, or the six bottles of wine that you got 10% off on because you bought all six at once. Doesn’t matter. Just know where it went.
- Set realistic and specific goals
Now that you know where your money is being spent, set some goals. Like, “I want to save $2,000 for my upcoming trip to Seattle”. Or, “I want to save $1,000 by June 1st to replace the air conditioner”. Or, “I want to save 50% of my take-home pay because I hate my job and want to retire”. “Or, I am throwing a super bowl party this month and need to make sure I have $200 for helmet shaped cookies and a Tom Brady big head”. You get the point. Make goals. But make them specific and realistic.
- Put your plan into action
Now that you have goals in place, start figuring out how you are going to reach them. If you are spending more than you bring home, you aren’t going to reach your goals fast. But that’s okay. You know where the money is being spent. ‘Budgeting’ isn’t about making your life suck. It is about taking control of your finances in order to reach your goals. Goals can be anything from retirement, to travel, to buying a car, to having enough money for Starbucks and shopping. Start with saving $5 towards a goal and increase when you can. Additionally, now is the time to start putting loose guidelines on how much you want to spend in each category for the next month. See if you can spend $15 less in going out to eat and put that money toward your upcoming trip. Start small and get early wins. This will get you excited for what you are doing. Maybe. As excited as you can be about budgeting.
- Adjust when necessary
Once you get past the “well, March was crazy and not every month will be like this” excuse, you can move forward. No month will be exactly the same. And you have to be okay with that. Also, you might have different goals today than you did yesterday. IT IS OKAY TO ADJUST THE BUDGET MID MONTH. As long as you don’t use it as an excuse for bad spending habits. On the 3rd to last day of the month, don’t pull the “I spent less on groceries so I can go buy clothes online” tactic. I did that once and regretted it. Clothes look hella good, but it just wasn’t worth it knowing that I have a kid on the way and needed to save some cash for him. And diapers. It’s okay to adjust as your goals adjust.
Like I said, budgeting isn’t supposed to make your life miserable. It is supposed to give you the peace of mind knowing that you have the money to spend on whatever you want, without fearing an overdraft fee.
Start by using these four, get control of your finances, and get started on reaching your goals – whatever those may be.