A lot people dislike budgeting. I totally get it, I did too! The word budget itself comes with a stigma. Budgeting is often seen as restrictive and boooring!
I am not going to say budgeting is a lot of fun, but it can be. So how did I go from hating budgeting to loving it?
It took a lot of trial and error and several years for me to take budgeting seriously. Like most people, I felt that being restricted by a budget was not a way of living.
They don’t teach you about personal finance in school and we didn’t really talk about managing finances in my family.
Our family didn’t have much, but I’d like to think we weren’t poor. My dad was pretty good with money, but he was always hustling trying to get ahead. He was (still is) a great entrepreneur and has always found a way to provide for our family.
His hope for me was that I never had to live paycheck to paycheck. Being in the USA gave me opportunities he never had and I could create a legacy for myself.
Unfortunately, I started off the wrong way. Once, I began making money of my own, it felt empowering and I wanted to make my dreams come true and buy everything I always wanted. Then I discovered credit cards and that was the beginning of my financial mess.
At age 19 I was drowned in debt and was barely half way my college degree.
After graduating, I had $60k in debt. I got a decent job paying $51k a year and I promised myself I would get my life together, so I began budgeting!
That was my first budgeting attempt ever. I was 24 at the time. I set up the Mint App and began tracking my spending. It was not perfect, but it worked. I began paying a lot more towards my debt and slowly got rid of some of the credit debt.
While it was good progress, I still didn’t have my spending under control. I’d still go on shopping sprees and stupidly spend money and later dealt with buyer’s remorse. I got disappointed because I would be over budget each time. Eventually, I would become less consistent with my tracking and finally, stopped tracking all together.
I did this a couple of times for about 4 years.
Here are four things I would do differently if I could go back in time:
1. Take it slow
You may have heard the saying “slow and steady wins the race”
This applies to managing your finances too. I jumped from not budgeting, careless spending to extreme budgeting overnight. Sudden change is not sustainable in the long run.
What does it mean to take it slow in terms of budgeting?
Start tracking without any obligation to meet a spending limit. Get to know your spending habits first. Where is your money going?
Once you have an understanding of what you are doing with your money, then you can compromise.
Would you commit to a relationship with someone you didn’t know at all? No, right?
Then you shouldn’t commit to a budget without understanding your money habits.
2. Make it easy
If you are starting out, don’t over complicate it. Use an app that links to your bank and then track spending into the different categories.
I think Mint App is by far the most user friendly app for personal finance. It learns your spending trends, making it easier to set realistic expectations.
Just remember, don’t commit from the get go.
3. Set long term goals
Short term goals are important, but long term goals are even more important for budgeting. Why is that?
Well because if you only have short term goals then you’ll quickly lose interest. Once you pay off that credit card debt, what then?
Back when I started budgeting, it was to fix my financial issues. It was a tool to fix a specific problem. Once that problem was solved, I went back to the same habits that got me to budgeting in the first place.
However, once I aligned budgeting with my long term goal to have a healthy and sustainable relationship with my money, it changed everything. Budgeting doesn’t restrict me, it allows me to live the life I want without guilt or concern that I will be short of money.
My goal is not to spend less, my goal is to build wealth. Through budgeting I make sure that I am setting enough money to build this wealth.
So think about it, what do you really want? How can you use the extra money you can save by spending less to build sustainable wealth?
4. Make sure to make room things that matter to you
You must make room in your budget for things that matter to you. If buying a piece of clothing is important, then have a clothing expense budget item.
For me, a yearly vacation and Friday date night are important, so I make room for them in my budget. This may require increasing my income or reducing one of the other expenses in order to make it fit.
At times when situation does not allow, we find creative ways to take a vacation. This may mean staying local, a weekend getaway, taking advantage of seasonal promotions, etc. Regardless, we always get our vacation.
Budgeting does not mean you have to stop doing the things you love, it just means you take control of your spending rather than your spending controlling you.
It is worth noting that not everyone needs a budget. Some people are naturally gifted and have total control of their finances. However, even then, I know of several financially gifted people that still budget.
If you have been hesitating, give budgeting a try. Remember, you don’t have to commit 😉.
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