For anyone that currently knows me, they know I’m generally quite good when it comes to money. I always know about all these coupons, ways to get discounts to save and always seem to have advice for people’s money problems.

But you know, I wasn’t always that way. One thing that is said to be critical when talking about finances? Have a budget… I used to hate budgeting.

Yeah, yeah I said it. Now you can close your gaping mouth.

The thing is, budgeting isn’t exactly bad, in fact it’s great. But for me, the conventional wisdom of making a budget just didn’t quite cut it.

Drowning in debt

Why I Dislike Budgeting

One common thing I always hear from people when they have trouble managing their money is “I’m too busy”. I get it, I really do.

Keeping track of all those expenses can be time consuming. Not only that, but a lot of people have perceived notions about budgeting, however their budgets are more aspirational than realistic.

It goes something like this: ” I’m going to spend $50 on gas, $50 on food and not go to restaurants all while cutting my utilities by $30″. Do you see anything wrong with this? How does one plan on motivating themselves to stick to such a harsh financial decision?

It might sound weird, but I believe finance can, and should be fun. Or at least rewarding in the process.

While I’m good at math, the downfall was having to balance more numbers in my head than was possible. I had to check often, sometimes multiple times a day to make sure I was sticking to it.

If you are a daily coffee drinker, now with a budget of $50 a month. Will you actually check your budget every time you go?

Maybe.

More likely you will be thinking more about the coffee and less about that budget.

I work hard, as I’m sure you do too. It was at that point I realized I shouldn’t have to work hard at my budget. It should be easy!

realistic-expectations

How To Make Realistic Expectations

I like to think of dealing with money like maintaining my health. If I eat all my food, especially my vegetables I can have that dessert I was eyeing earlier.

An easy way to put this into perspective is to get the unavoidable stuff out of the way; aka your fixed costs. A fixed cost is anything you would feel bad about not paying. Examples of this include:

  • Rent
  • Utilities
  • Emergency Fund
  • Retirement Savings

You may be saying to yourself, emergency fund? Retirement savings? Those aren’t fixed costs. But let’s think about this. A rainy day fund is absolutely necessary. Retirement is necessary. Just like a little kid would feel when they’re lost in the mall, you will eventually panic when you don’t have any money for an unexpected life event or you can’t retire comfortably.

Pay these expenses first. Have these automatically deducted from your bank account or check. Anything left over is essentially your fun money.

That way you don’t have to think about whether or not you can buy something. You already know you can because you’ve taken care of your necessary costs.

The next question of “should I buy this?” is a completely different matter on its own.

When it comes to your fun money, spend it on whatever  you wat

Seriously… Just make sure you know you actually want it.

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Create A Vague Budget List

After you have taken care of your necessary expenses, it’s time to create what’s known as a vague budget. This is anything you enjoy spending your money on. It could be things like:

Sports events
Movies
Going out to eat
Concerts
Traveling

Now that you have created your list, try to spend your fun money on these things. If you’re spending money in areas that don’t make you happy or makes things easier, consider putting that money elsewhere into places like retirement.

Next, put a ballpark figure next to your fun items. Don’t spend more money than you have, but also don’t get too upset if you spend over your limit. Just remember, this is a vague budget list.

I personally evaluate this every month, for some it could be on a yearly or weekly basis, do what works for you.

bigger-smaller-picture

Think About The Bigger Picture

Oftentimes, the instant gratification isn’t always the best way to go.

But hey, it happens. It’s natural. Sometimes you just have a midnight McDonald’s or Taco Bell craving. We’ve all had them.

In the long run, it’s always more rewarding to hold out on things you really want.

Delayed gratification is extremely hard, believe me. I witness it every day. Instead of focusing on I can’t have this or that, figure out what it would actually take to get those things you can’t have RIGHT NOW. 

Investing isn’t just meant for goals like retirement, it can also help you get that trip to Hawaii, or those new golf clubs you’ve been eyeing.

An easy way to do this is by creating different savings accounts and labeling them your goals. Then every paycheck or every month you deposit some fun money into those accounts. You’ll get the satisfaction of watching it grow as well as the sweet success when you finally use that money towards something you love.

At The End Of The Day

A budget is just a tool to help us better manage our lives, but you don’t have to come up with anything complicated to stay financially fit.

Contribute to your necessary expenses, prioritize what you love spending money on and resist spending on little things in return for a bigger reward.

Good Luck, Newbies
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