BUDGETING BASICS
- Dec 2, 2016
- 3 min read
Since it is the start of a new month I thought it was the perfect time to discuss everybody's least favorite word - BUDGET. Most people hate the concept of budgets because many don't like to be told what to do with their dollar bill. Also, they think it is very complicated such as the picture below, but it is not:
A BUDGET DOESN'T RESTRICT YOUR LIFE, IT MAKES life EASIER
There was one question that changed my entire outlook on budgeting. After evaluating my bank balance and income, I asked, "where did all of my money go?". I didn't have an answer and that scared me. Some people don't realize that a budget is necessary. However, I can guarantee you that one of two things will happen: a) You will control your money and tell it where to go OR b) Your money will be in control due to poor decisions and go where it wants. This will leave you clueless at the end of the month. Poor financial decisions frequently forces us to have more month at the end of our money. For example, you spend your entire month's income by the 15th of the month and now you have no funds for remaining expenses. I don't know about you, but that sounds stressful. Besides, everything needs a plan. Wealth isn't accumulated by mistake, it is a choice.
A budget is only a plan consisting of your monthly income and monthly expenses. The key is to make sure that your expenses DO NOT exceed your monthly income. Every dollar has a responsibility, if it is left unnamed that's where chaos finds its home. If you have a guilty pleasure of spending $400 on clothing every month, assign a place for it in your budget. It is absolutely okay to have wants, but it should be planned according to your income.
Just remember 3 major things:
1. You want to create your budget before the month begins. Pick a day late in the month to budget for the following month.
2. To make sure every cent has a responsibility, create a budget that results in $0.00 remaining. This is called a zero based budget. The goal is to enter next month knowing how much money you have allocated for bills, savings, debt and personal expenses. Include all the money that comes in—your regular paychecks, side jobs, bonuses and so on. A tip to follow is to take care of necessities first, i.e. food, lights/water, rent. Then, proceed with the remaining expenses. After doing so, this will create your zero based budget, leaving no money behind.
3. This is where people run >>> TRACK YOUR EXPENSES. This will help with achieving your goals and prevent overspending. If you budget $100 for eating out and spend $20 at a restaurant, track that transaction so your budget shows $80 left. On the other hand, if you spend your eating out budget before the end of the month, get ready to eat some leftovers the last weekend. (I'll be doing another blog on this later - Ways to Prevent Overspending)
Below is an example of a zero based budget using the EveryDollar web application:
This task will take an INTENTIONAL effort, especially if you have goals such as paying off $80k in student loan debt or becoming a millionaire by 45. Goals such as these take time and need a plan. If you haven't created a budget for December, set aside some time to make an attempt.
If any of you need help or have ANY questions you can message me via Facebook or email. I have also created a way to send anonymous questions at: https://christian-principal.tumblr.com/ask
LUKE 14:28
"Suppose one of you wants to build a tower. Won't you first sit down and estimate the cost to see if you have enough money to complete it?"
( It takes a plan to obtain wealth or to pay off $150,000 in debt. Let's plan people )
PROVERBS 27:23
Know well the condition of your flocks, and give attention to your herds.
( A shepherd's flock and herds are essentially his/her income. Pay attention and always know the condition of your finances )
PROVERBS 21:20
Precious treasure and oil are in a wise man's dwelling, but a foolish man devours it.
( The ability to answer the question - "Where did my money go?" shows wisdom. Being intentional with your money will result in a legacy being left for generations )
Comments