Budgeting isn’t something that we necessarily want to talk about, but that doesn’t mean that you can just ignore the amount of money going in and out of your life. You definitely need to make sure that you are covering every single aspect of your finances if you want to hit any of your financial goals.
A budget can be compared to the foundation of a house. If you aren’t thinking about the foundation, how can you possibly think about the roof? How can you think about that shiny new bathtub that you want when your foundation is cracked? This is something that plagues a lot of people when they’re trying to start out, but that doesn’t mean that it has to affect you. That doesn’t mean that it has to cause you stress and grief. That doesn’t mean that you have to find that everything is messed up. You’re young — you can always correct course before it’s too late!
And really, when you think about it, it’s never too late — it just gets harder as life goes by. So let’s go back to that budget, shall we?
A budget is really just a plan. You can make this plan anything you like, as long as it gets the job done.
The way we like to set up our budget is pretty straightforward. You see, we like to have an Excel workbook for this task. That’s a workbook and not just a worksheet. So one file, with multiple sheets for everything. We have it broken down by month, where you have a listing of everything you need to purchase in the month. It can be general, such as “utilities” and “food”, along with specific things that are only coming up during that time period. For example, let’s say in November your vehicle registration is due. This is where you have to pay property tax to help pay for roads and other maintenance work.
You will want to make sure that you are definitely thinking about the road ahead here. Forecasting what’s coming down the pipe will help you avoid emergencies — that is, expenses that come up at the last minute. If you can build an emergency fund, this takes care of that problem very nicely. But what about when you really don’t have the power to take care of your expenses in that manner?
You will just have to focus more on the current expenses and see what you can pare down. For example, a lot of people have cable on their list. Do you really need cable and internet at the same time? Not when companies are putting full length TV episodes online. It’s possibly to watch a lot of TV shows online. The companies are going to make money off the advertising either way, so everything works out. You get to save money and still catch all of your favorite shows.
It’s a matter of figuring out what’s really essential and what isn’t. Separating needs from wants can be tough because everything feels like a need.
However, think about it like this – do you really need new clothes, or can you make do with what you have? What about that fancy new phone? Can’t you get a prepaid phone?
What about food? If you go out all the time, you’re paying a premium for someone else to cook food for you. That would be a real shame to watch good money go out the door just because you’re feeling lazy. It makes a lot more sense to have your meals at home. You can still include premium ingredients, but since you’re doing the cooking you save a lot of money in the process.
When it comes to your budget, is owning a car really necessary? If you live somewhere where there’s a lot of public transportation, the answer is definitely no. You don’t need to get a car if you have this issue, because it’s quite possible to get where you need to go without any hassles. Yes, you might have to time your schedule a little differently than most, but you can make it happen. It’s really not that hard to do.
What you do need to handle is the impact that other people have on your budget. Are you always the person that everyone goes to when they need money to borrow? That’s not a good thing at all. You want to make sure that you are able to take care of your needs without fail. This means that if you need something, you can make it happen without getting short. Sometimes that can be hard when other people are asking for money.
Learn to cut people off from using you all up. This gives you the power to not only change your own life, but to be there when people really need you — without resentment, fear, or guilt. Good luck!