Budget — an estimate of income and expenditure for a set period of time.
The word budget is something I have unintentionally avoided for a very long time. It’s not that I never knew the value of budgeting. It was more to do with the tediousness of the task. And a slight feeling of the uneasiness of confronting all my debt, expenses and income. (Or lack thereof).
For some reason I always ended up with more month at the end of the money. Scratching my head in confusion. Thinking ‘what did I actually spend any of it on?’ I decided it was time to sit down and sort this mess out once and for all.
In this article I will show you what I have learnt since creating a budget and understanding how my money works. I will discuss tips on starting your own budget and how it can help you get out of debt and tackle your finances head on.
“Many folks think they aren’t good at earning money, when what they don’t know is how to use it.” — Frank A. Clark
1. The business of budgeting.
Imagine a company that doesn’t track its finances. It sort of knows how much is coming in. But does not keep track of where that money is going, Who’s spending it and how to make the most of it. This company would more than likely fall apart.
Conflict would break out, people may not get paid on time. Debt would rise and… you get the point. It would be a disaster!
This is the same with our personal finances. Unless you have no responsibilities whatsoever. Not keeping track of your situation will lead you to a limbo that can become difficult to get out of.
OK, I’m being dramatic, but it’s something I have experienced. My finances where all over the place because I had no idea where they were going. And to be honest I didn’t care to know.
I always paid attention to what was coming in but never took the time to understand where it all went. How to make it last and how to make it grow.
2. Budget like a minimalist
Minimalism as I understand it is the art of doing more with less. For a long time I tried to do way too much with way too little. I had a laundry list of things I thought I needed to buy when the pay check came in. But for some reason I found myself quite content when I had no money.
I decided to take the minimalist approach. Giving myself a budget for what I actually needed and decided to save for the glitters and golds.
Understand what you need and what you can live without. Be honest with yourself and your friends. we all want to live that Instagram lifestyle but dipping into your overdraft is not the way to go .
If you want to be wealthy you have to come to terms with limiting yourself now, to reap the rewards later.
3. Pay yourself first
This was a hard one to put into practice.
You will only begin building wealth when you start to realise that a part of all the money you earn is yours to keep.
When money comes in we are quick to give away every penny. To bills, debt collectors, subscriptions and more. Yet we forget to give something to ourselves.
Start paying yourself even if it’s a tiny amount. Consider it a reward for your hard work. Like a trophy cabinet. Don’t you hate saying, I’ve been working all month yet have nothing to show for it. Make sure you keep something for you.
4. Delay Gratification.
This ties in with the minimalist approach. There will be times when you want to buy something expensive. You may well have enough money to buy it in your account. But will you have enough money to survive until the following pay day.
A good rule a friend once told me is to only buy something (that is not an essential) when you can afford it three times over.
These days we have the ability to get anything we want quite fast. We have become a very impatient society.
Mastering patience is a virtue we all need to remember so we can get ahead in all aspects of our lives.
Budgeting can seem like an unnecessary thing to some. Some finance guru’s say that it makes you a prisoner and stops you from enjoying money that you worked so hard for.
You are the one who determine your budget so its down to you how much money you want to use and save. But remember the less you save the longer it will take to become financially free. So save quicker!