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Budgeting 101

I've said this a thousand times before and will say it a thousand times more in the future. The budget is the foundation of almost all financial success. Learn how to live on a budget today and your tomorrow will look all the more pleasant. Ignore the budget and you may wake up one day only to realize it's too late. Too much time has passed to correct yesterday's ignorance. So stop running with the pack and trying to keep up with the Jones. You aren't fooling anybody! Countless families live in very expensive homes, drive expensive cars, wear expensive clothes, and eat out way too much. But they don't have very much money (if any at all) left over at the end of the month. They have next to nothing in savings and aren't putting near enough money into retirement plans to have any real quality of life when tomorrow finally comes. If this sounds like you, then good news. You can change it if you want to.

When the pain of financial stress gets heavy enough, you know it's time to examine your habits. The best place to see the impact your habits have on your financial health is your budget. Almost everyone that does an honest review of their budget will undoubtedly have their eyes opened to the negligent waste of money that has gone unchecked for too long. Add up all of the purchases on "stuff" that you didn't really need for the last 6 months (go ahead, I'll wait). Now that you're likely appalled at the large sum of cash that you no longer have, what's the next step to make a lasting and positive change? The first step is you have to get serious! If you don't adopt an entirely new mindset and truly get passionate about changing, then this won't work. So now that you're serious about your new mindset, let's talk about real budgeting.

You've likely heard a financial professional talk about budgeting at some point in the past because it plays on people's emotions. There is money to be made selling "tools" that will help you in this area. There are apps, books, budget worksheets, and a multitude of other products that are sold to teach you how to budget. You don't need any of that! All you need is a pen and paper. This isn't complicated in the least and no amount of financial education is needed to straighten out a budget. The reason the budget is a concern in the first place is likely based on habits, not lack of education. So go through your budget, line by line. You should easily be able to separate the money you needed to spend from the money you did not have to spend. This is called non-discretionary vs discretionary. Next, start using an actual meal planner for breakfast, lunch, and dinner. So many people spend far too much money on eating out and groceries. This area of the budget can almost always free up several hundred dollars per month. Start learning how to meal plan and how to shop today and you should quickly see the savings. Are you spending too much on the cable bill? Let's be honest here. Is it really worth it to spend over $100 per month when you could pay for Netflix, Hulu, or one of the many other providers that cost less than $20 per month? When was the last time you shopped for insurance for your home and car? Yes, you can likely save a good chunk in this area too. Cell phones anyone? Did you really need the latest iPhone? Are you paying for the insurance on the phone? Because if you are, you are likely wasting your money. Don't believe me? If the cell phone company providing the insurance was having to pay out more than they bring in on repairs, they wouldn't offer the insurance anymore. Need a debt reduction strategy or a student loan strategy? The list goes on.

If you completed all these very simple tasks combined with your new unwavering mindset for the course of one year and calculated the money saved, would you be glad you implemented the change? We both know the answer to that question. So get started now by implementing your new budget. Think of it like you are getting paid to identify the areas of waste. Budgeting like a pro is a habit of nearly all wealthy people. So let's get your name added to that list.


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