The Why And How Of Budget Mastery.
If the word budget makes you sweat, then budget mastery may sound impossible. Nothing could be farther from the truth!
Here’s a look at why budget mastery is so important to your financial future. Then a practical idea of how to take your first step toward mastering your budget!
You may think that the key to financial success is investing prowess. It’s not. Investing is important of course, but it’s not the key. Budget mastery is. This may be shocking to hear a Certified Financial Planner say. But over the last 30 years working in the field, I’ve learned that budgeting and spending is more important than investing.
Why? Because even if you are an investing wizard, if you spend too much, you’ll soon be broke anyway. In other words, think about spending first if you want to get your financial life in order. Of course this will help you save money. But in addition, many money saving tactics will pay off for you across the entire spectrum of your financial life.
Focus On Your Fridge
Let’s learn about mindful spending by first thinking about your ice box. This is an easy way to learn about cutting out the waste in our lives.
I find that people often look for some magic pill (like extreme couponing for example) when it comes to cutting back at the food store. They’ll try a new fad to get some control without really thinking about whether or not this is something they can realistically maintain.
While couponing can help cut back on what people spend on groceries, extreme couponing is not for the average person. It takes time, planning and an extra freezer to boot.
What people don’t realize is, no matter how much they paid for their groceries, roughly a quarter of that food gets thrown in the garbage. If people just made sure that they ate the groceries they purchased before they expired, they would save roughly $2200 a year. I find it much easier to just eat what I purchased versus matching up the latest circular with the latest coupons
– via Forbes
Budget Mastery Starts With A Budget You Can Work With
The first step to budget mastery is, of course, making the budget. Here are a few simple tips to making a budget that will work for you and set you on the road to mastering your budget and moving toward a bright financial future!
The word “budget” strikes fear and panic in many. No one likes to think about them, let alone talk about them. The truth of the matter is that most budgets fail, and they fail badly, because most budgets lie. Yes, that’s right — they lie. A budget can represent whatever numbers you put in it. If you forget to add a bunch of expenses in each month, then it makes sense that you would be over budget month after month after month
1. Create a Second Column
Not to be redundant, but we’ve got to first start with the budget. Why most budgets fail is because they only have one column, the budgeted column. We’ve already gone over why this doesn’t work. Instead, upgrade your budget to a two-column layout for success. Your first column is the “What I Think I Will Spend” column, and the second column is the “What I Actually Spent” column. Basically, you create two mirror columns to accurately display what is going on in your budget for a given month.
2. Fill in “What I Think”
The “What I Think” column should be the easiest column to complete and shouldn’t take you more than a couple of minutes at most. This column represents all of your budgeted items. It’s an approximation of what you think you will spend during the month. Most of the numbers should be easy to access from your normal monthly expenses. Don’t labor over this column too much, but make sure that you attempt to accurately itemize each income and expense item.
3. End of Month
The end of the month is where things start to get a bit more analytical (but don’t let that scare you). At the end of each month, print off your most recent bank or credit card statements in which you’ve incurred your expenses for the month. This is the easiest step in the eight-step process, but it’s critical to analyzing what went on during the month.
– via Wise Bread
Have you ever made a budget?