In the realm of personal finance, the word “budgeting” comes up all the time. How do you feel about it when you hear it being said over and over again?
If you feel restrained, deprived, stressed, overwhelmed, or likely to fail, you aren’t alone. In many ways, making a budget and sticking to it is akin to staying on a diet plan or committing to exercise regularly. Not easy. Not fun. Or at least that’s what we are telling ourselves.
I used to think budgeting is synonymous with being frugal, and heck I didn’t want that. So I spent as I pleased. Years later, I got wiser. Budgeting doesn’t mean living as a cheapskate (though there’s nothing wrong with that.) It simply means being smart about money. Here are some tips about how to do this successfully:
Find Puzzle Pieces
Gather receipts. Comb through bank and credit card statements. Follow the crumbs.
If being a data detective is not your thing, there are apps doing exactly that. But be aware some such apps may charge a pretty penny to use their premium features, and that is not an option I personally would take.
However you go about finding the puzzle pieces, the difference between what you make and what you spend is how much you save (or not) every month.
Take Baby Steps
Now you know where things stand, let’s set a goal –
If you are a saver, up the amount a bit.
If you break even, or if you live beyond your means, think about which spends are for necessities and which are for wants. Cut back a bit on the impulse buys and self pampers.
How much of this “a bit” is entirely up to you. The only requirement here is it needs to be realistic, a figure you know is within reach.
To Err Is Human
Hitting your goal every month is great, but extremely unlikely. Reality bites. What matters is to understand why you miss it.
Was the goal too high? Was it because of the unexpected car repair last week? Was it because of the splurge on three pairs of winter boots?
As an often quoted proverb says, “Inch by inch, life’s a cinch. Yard by yard, life’s hard.” Changes take time. Don’t give up at the first sign of trouble. With patience, you will find the rhymes and settle into the new norm. When that happens, get ready to recalibrate your goal, bit by bit. Steadily and surely, your nest egg multiplies, lining alongside the path to your personal finance freedom.
The journey of a thousand miles begins with a single step.
lao tzu
