How To Start An Actual Budget
Sure, a lot of your financial success in life depends on how much you make. However, what if I were to tell you that it more so depends on how much you save. Let’s say you are a construction worker who makes $40,000 a year. You save vigorously and make every penny count. You spend half of your income on groceries, rent, utilities, etc. The other $20,000, you put into a savings or investment account. Now let’s say you take an average citizen who makes $100,000 per year, but like so many of us spend like a crazed lunatic. You buy a new car, have a car payment, go out to eat like you have the money, and spend money on non-essential items. This person will likely have at the most $20,000 saved up after a year. We can all agree, it is nice to have a solid income, but what’s a solid income with no savings plan.
No, I am not the next Dave Ramsey, nor do I act like it. However, I do agree that most of his principles are very effective for long-term financial growth. The number one thing I can concur with is starting a written budget. Actually, let us take just a few steps backwards. This is not for anyone. If you are just lollygagging around and have no real plan, desire, or passion to change, you will quickly fall off course and go back to your old spending habits that everyone has grown so accustomed to. First, you must find it within yourself. “I actually want to do this, I am ready for a change.” Only then, will a written budget work. If you have had enough and are tired of your money controlling you, let’s move on to the fun part.
“I am not telling you it is going to be easy, I am telling you it is going to be worth it in the end.” -Art Williams
The only budget that will work, at least in the beginning is a physical written budget. Stamp it smack on the fridge, or anywhere you will see it every morning. At the top, jot down your motivational quote or something you think will help you stick to your written plan. Mine reads, “The be all that ends all”. Progress with writing down your income every month, after-tax. Then under that go ahead with all of your expenses you are going to incur over the month. This can include but is not limited to: rent, utilities, groceries, gym membership, music membership, car payments, student loan payments. After you have all of your reoccurring expenses written down, you need to decide if you want to set aside a little more money for miscellaneous activities such as going out to eat. I would not recommend this until you have no monthly payments besides your home. After this, study it, live by it, put a check beside each expense, and finally, write down how much money you have leftover every month. If you are unsatisfied with that number, cut corners where you can. It is your budget, no one can control it but you, no one can stick to it but you.
A written budget is the only way to stop falling into the same trap almost every American falls into, spending. If you don’t believe me, take your car payment and put it into a retirement calculator, hope you love the car. Having a physical copy of your financials you can visibly see every morning is going to change how you view money. Sure, you won’t be able to go have drinks with your buddies on Saturday and avoid a $100 bar tab because you get too intoxicated and buy drinks for the whole place, but you will have financial freedom later in life. Your early years are for grinding. Have some fun, set aside some of your budget for miscellaneous expenses if you can afford it, but always remember the end goal. You will thank me later in life.
