Welcome to our Budgeting Series!
Wait!! Don’t hit that back button just yet. You know deep down inside that you need a budget. Right? Right! So let’s make a deal.
My part is to write the following four part series with the promise that each segment will be short and simple:
Part 1: 5 Reasons Your Previous Budgeting Attempts Failed
Part 2: 5 Things Your Budget Will Do For You
Part 3: Nuts, Bolts and Tips for Your New Budget
Part 4: How Your New Budget Will Change Your Life
Believe it: you CAN have a simple budget. You won’t be reading any financial technobabble nor will you need any high powered math skills or cumbersome spreadsheets.
Your part is to read the series and give budgeting a try. After getting your budget up and going, you can always go back to your current method of mismanagement if you want, but my guess is that you won’t want to.
Fair enough? Great!
Let’s dig in with Part One: 5 Reasons Your Previous Budgeting Attempt Failed
I realize your past attempts at budgeting haven’t worked, but ask yourself, “Do my former failures justify future mismanagement?” Of course not. Millions of people successfully manage their money and, if you can identify the pitfalls which shanghaied you in the past, you can too.
See if these sound familiar:
1. You left things our of your budget.
Many people grab a yellow lined pad, write down what they think of at the moment, and expect it to work. Budgets need to include EVERYTHING, even an appropriate amount of “blow money”. Why? Because in real life we really do blow money.
2. You made it too complicated.
Computer nerds: listen up. A workable budget isn’t a 10 page excel spreadsheet that you deliver from the mountain like Charlton Heston in “The Ten Commandments”. A workable budget needs to be simple.
3. You didn’t actually do it.
Some people talk about budgeting and think about budgeting but never actually get paper and pencil out and write one. Is this you?
4. You didn’t actually live on it.
No matter how carefully you prepare your budget, it is useless until you (and your spouse — if married) commit to following it. That commitment is the difference between theory and reality. Here is the deal: you control the budget, but once it is complete, it controls you. No cheating and zero exceptions. If you don’t like something in it, go ahead and make adjustments, but always re-commit to follow your budget each time you fine tune it. You will never know if it works unless you live on it.
5. You gave up too soon.
This is the biggest budgeting pitfall. You will not have a perfect budget the first month you try it, so don’t expect to. I am not being pessimistic; I am being realistic. So don’t give up if your budget has holes in it the first month you try it; think of it as a work in progress and give it three or four months to cooperate fully.
Don’t give up on budgeting because of past failures. You work hard for your money and it should work hard for you. Get up, dust yourself off and try again!
Did I keep my promise of short and simple? Let me know. And let me know if you are doing your part.
Readers: have you tried and given up on budgeting? Why? If you are successfully budgeting, how many months did it take you to make it work?
Most budgets do not work because you don’t want the result or outcome badly enough! My solution for that is to reduce my discretionary income by deducting savings first. It provides the discipline or structure to keep me in line. I won’t overspend because I can not rationalize paying interest.
Once you have money, budgeting is a big problem on your part. If you don’t have discipline in spending your money, it would be very difficult for you to start handling all your finances.
Joe,
I find that for some people, they don’t understand why they should have a cash flow plan.
Since they have never set any long term financial goals, they don’t see the trade-off between wise money management in the present and accomplishing what matters most in the long term.
Derrik Hubbard, CFP
http://www.thestewardshipsolution.com
@Jenna,
I am glad you are excited about this series. Sorry, but I don’t have any special excel software (other than the home made form I use myself). Would you like for me to email a copy to you?
@krantcents,
Right. If a budget is not a tool to help reach a goal, it is nothing more than bookkeeping. I love the concept of taking that savings out first and forcing yourself to live on whatever is left over. I will be using that concept in part 3 of this series.
@Samantha,
Yes…with money comes responsibility. Budgeting is the answer.
@Derrik,
I think you nailed it. If a person does not have long term goals (or short term goals), he sees no need for a budget. I will address that in part 3, but it is a great point for part 1. Thanks for helping out!
@Jenna,
I will be referring to the same Christian PF post you told J Mae about in Part Three of the series. Also an Excel spreadsheet Bob recommends. Small world!