Myth: Budgeting takes to much time, it’s too constraining.
Truth: Budgeting provides MORE freedom. True wealth and financial stability start with a budget.
The terrible “B” word, budget. Does the word budget give you a good or bad feeling inside? If your palms start sweating and heart rate starts pounding, this article is for you! Budgeting for some insane reason has some negative connotations to it. Budgeting is basically having a plan for your money. Stop throwing your money around like it’s easy to earn. Don’t view budgeting as putting handcuffs on your life but unlocking true freedom.
1) If you are just getting started with budgeting, start with the most important expenses first. Things that should come to mind are the mortgage, rent, food, insurance, gas, loan payments, giving, savings etc. Then continue to fill in the rest of your budget with all the leftovers like restaurant, entertainment, gym, Netflix, etc. A wise man once said, “show me your budget, and I will show you what you prioritize in life”. It’s important to always start with all of your needs in life, then fill in the rest of your wants.
2) If you’re married, you need to budget with your spouse. We have been together for over 11 years and from experience communication is key. We hear too often of married couples not being on the same page when it comes to finances. Budgeting together gives you a sense of understanding. Brittany is our super saver and I am a little bit more lenient. It’s perfectly fine to view money differently but the main thing is you come to a sense of understanding. If you’re single, have someone close to you keep your accountable.
3) Budget to zero before the month begins. Straight from the man himself Dave Ramsey. We only started budgeting to zero a few months ago, let me tell you it’s been AMAZING. We use to have the mindset of budgeting to see how much we had left. The money we had left would either go to our savings account or our “nest egg” account on Betterment. Now we budget down to every dollar every month. Doing this gives you a much clearer understanding of your monthly finances.
4) Your budget does not stay the same month to month, be flexible. For example, this month we are on a ski vacation at Mont Tremblant in Canada. Obviously, when you go on vacation you have extra expenses. Some other expenses to keep in mind that change from month to month: birthdays, Christmas, holidays, vacations, utilities, insurance, doctors visits. Be sure to adjust your budget at the beginning of each month.
5) If you have debt, focus on paying it off as fast as possible. There are a few popular theories for paying off debt. The most famous theory is the snowball effect by Dave Ramsey. Start with your smallest debt first and pay it off as quickly and aggressively as possible. Then let it snowball into the next amount of debt you have. Paying off your first debt can be the best feeling in the world and motivate you to continue to destroy the rest of your debt. On the other hand, you can use the avalanche theory, where you pay off your debt with the highest interest the most aggressively. This theory is popular for many, the numbers don’t lie in being $avvy.
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6) Make budget cuts if you’re tight on money. You should not have to worry too much about “meeting” your budget every month. Be honest when making your budget and budget every dollar. If your budget is too tight it’s time to start making some smart decisions to reduce expenses. Cut your cable, lower your energy usage, use less water, don’t eat out as much, say NO to people. Hell call every company you have a bill with and negotiate a better price, it never hurts to ask.
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7) Keep it simple, there is no reason to stress about starting a budget. When Brittany and I were starting out on our own we used the good old pen and paper strategy. We then moved to an excel spreadsheet method. Finally, we got savvy and started using Mint.com, it’s incredible! No matter what level of tech savvy you are there is an easy way to budget. Don’t let this be an excuse that holds you back from starting.
8) Don’t get upset if it does not work at first. Budgeting takes time to learn! You are learning something new and it can be completely foreign. Have patience, especially if you have a spouse or loved one that you are planning on budgeting with. It’s best to just START. The sooner you start to budget the sooner you start controlling your financial freedom. Becoming efficient at budgeting and controlling your finances takes a few months, give yourself that grace period to figure it out.
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9) We are tech-savvy millennials, take advantage of credit card rewards. I need to preface this by saying, if you are not responsible with your money, DO NOT USE A CREDIT CARD. Credit card debt is the worst debt you can have with the highest interest rates around. I mentioned before that we use Mint for our budgeting. They work hand in hand with our Capital One Venture credit card, automatically sorting our transactions to the right categories in our budget.
10) Be thankful. If you are reading this blog, you have a device that has access to the internet, that’s better off than half of the world. You have much more than you actually realize. Take a few minutes out of your day and write down everything you can be thankful for. In budgeting, this is very helpful to know the difference between “wants” and “needs”. Stop comparing yourself to your peers! Focus on your own situation and do what’s best for you and your family.
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When you start to budget your life will change. It will be difficult for the first few months. Just like any habit it takes time and gets easier over time. T$C believes that if your give budgeting a try for a few months you will feel so much better about your finances, and life in general. As humans we are naturally drawn to being in control of things, start being in control of your finances. Imagine not having to worry about money, living paycheck to paycheck, car repairs, having to say no to everyone, and feeling stuck in life. Budgeting is key in having financial freedom.
What other tips and tricks do you have when budgeting?