Most people consider budgeting when tey are lookign to buy a new house, a car, that new computer you have been eyeing. Either way there is usually a very clear, quantifiable goal to most people’s effort to start budgeting. This is a huge driver in getting organized but it’s not the only reason you should budget. Budgeting not only gives you an outlook on your current spending but allows you the opportunity to analyze your intent. Maybe you never realized you spend $3000 a year on Gatorade and you personally feel like that is a waste, or even worse you spend $200 dollars on a monthly gym membership and go to the gym maybe 12 times a year. I’m going to emphasize the power of everyday budgeting to self-reflect, analyze and ultimately be more pointed your money, time, and effort.
If you have a goal in mind that makes things easy. A new computer cost $2000 and I can get away with saving $200 each paycheck that’s 10 paychecks before I will be able to buy the laptop. A simple example but very effective in showing how easy it is to start budgeting. Set a goal figure out how you can get there and then set a date/action plan. Save $200 for 10 paychecks or 20 weeks. For more general budgeting to not only set yourself up for a successful future but also reflect on your spending habits you are going to want to go for a more thorough breakdown. In 2021 many of your banks and tax professionals will actually help start this process for instance my bank provides a statement analysis each month and one at the end of the year for the cards I use. This puts all of my spending into categories which is a great start in getting a larger view at my spending. I personally take this a little farther and here is how. I look at my last month’s paycheck then write down everything I spent $ on within that month including bills/eating out or sending people money on cash app. I put the different items in the categories of my choosing and then look at how much I have left over. That amount leftover is sometimes very sobering but when you have the information right in front of you it is a lot easier to act upon. Once I have this info, I set a budget for myself based on these numbers. Now I have a list of my expenses, how much I make, and what items I could dial back or maybe spend more on. From here more is possible.
Another thing about budgeting is that once you start you must perpetually monitor, adjust, and create new goals to maximize your potential. Now these goals are more realistic you can track where you may be going wrong and can also decide what to increase or decrease based on these numbers. Some good habits to get into are checking your bank account every month, every week, and every day. This will make sure you are keeping an eye out on unexpected charges. Your bank can only catch so much, I once remember I was getting charged for 2 amazon prime accounts and it took me 14 months and almost $200 to realize this. If I would have monitored more often, I would have noticed the same charge for the same thing relatively close to each other, allowing me to prevent this charge and save almost 200 on the year. Create a living document something you can consistently update and reference, using excel or google sheets is great place to start and creating a simple table is extremely easy. Additionally, this living document allows for some more complex budget calculations. Within excel I can set up or have someone else set up specific calculations that can help me predict how long it will take to pay off a certain bill/debt and how that plays into my budget over an infinite number of months. This has helped me more realistically time major events in my life such as purchasing a home or living abroad for 6 months at a time.
For tools and guidance on budgeting and how to take this to the next level in business contact me at IshmaelStinson.Org