Link Here For Part 2: Budgets – You Are Here Now
Link Here For Part 3: Personal Financial Planning
Part 2 – Budgets: Why Should I And How To Create And Use A Written Monthly Budget
The simple answer to this question it that you will never be able to get to wherever you want to go, if you do not know where you currently are. Having and using a budget solves both of these where you are and where you want to go issues at the same time.
Stop and think about it for a moment: If there was a tool that could bring your mind, family, and finances into harmony, dramatically reduce stress, and make the challenges of life much more manageable, would you take advantage of this tool? Why wouldn’t you?
Well, such a tool does exist. A budget allows you to take control of your finances, instead of your finances controlling you.
You can create a budget that just may allow some of your dreams to actually come true while making sure that the necessities of life that need to be taken care of are taken care of.
Getting There
1) A Budget Lets You Know Where You Stand Financially.
With a budget in place you will know what your income is and what your expenses are. With knowing what your monthly income is you can then review your expenses to see if any changes need to be made to them. If you are spending more than you are earning then you can easily figure out where you can make the cuts to your expenses in order to bring them in line with your income, Obviously the purpose here is to have it so that your expenses at least are the same, and the even better goal: Having your expenses be less than your income.
2) With A Budget And Having Your Money Matters In Line You Can Start To Make Real Plans For Your Future.
You may wish to take vacation, buy a new car or save for education expenses. With a working budget your can now plan for these goals and figure out exactly what you need to do in order to have the money available to achieve them,
- Simply put, using a budget is crucial to have and to use because it allows you to limit how much you spend, allows you to see what you are spending your money on, and allows you to save some money for the future.
- Using a budget will help you make smart financial decisions, be more prepared for emergencies, reduce and eliminate any debts that you may have and focus on your financial goals that you may have for the future.
A Budget Is The Basic Foundation Of Any Financial Plan.
A financial plan is the starting point in the GPS of your monetary goals. With the budget in place you know where you are and then with a financial plan, you can begin to get to where you want to go. Since money is such an important part of our daily life, a financial plan is tightly intertwined with everyone’s life goals, dreams and ambitions. But we are getting ahead of ourselves. Financial plans will be discussed in more detail in another article. For now, we need to get you going on creating and implementing your budget.
What? You say that you don’t need a budget and that you have control over your finances and spending.
Maybe you think that you do and maybe you you don’t.
- If You have three to six months to a years worth of your annual income saved in a cash bank account
- If you have everything paid off and have no debts
- if you are paying off all credit card bills in full each month
- And, if you have maxed out any allowable retirement saving vehicles that are currently available to you.
Then maybe you do not need to create a budget.
If you are a member of this extremely small group of people, then stop right now. You have no need to read anymore here. Go and live your life. But if you do not have a check-mark beside all of these things…
I am willing to bet that most of the men reading this article are not in this camp. Most of us could use some common financial sense that comes with creating a budget. Truth be told, most of us are probably one paycheck away from living out of our car, and that is assuming that the car is not repossessed if we do lose our paycheck. I am sure that most of us men need to budget our money. So, please, get yourself a cup of coffee and keep reading.
What is it that most if not all men really want in their lives? Money? Power? Women? Yes, yes and YES!!!.
But these things are really just by-products of what being good with money actually gives you.
Being good and smart with money allows you these two very important and crucial things:
1) Control
2) Knowing Your Limitations
Control Your Life
With control it is meant that you have some control over your life when things happen that are out of your control. If a large financial emergency comes up or you get laid off from your job and weather the storm. Control means that you have money in the bank so you can survive for a few months and pay your bills until you find a new job and not end up in debt or out on the streets. Or you decide that you want to make a career change and you have money to pay for training or education to get yourself up to speed to be able to make the career change.
We are not talking about controlling or manipulating other people with money. We are talking about having a say and some control over your own destiny and not always having to answer to the banks or credit card companies. We are at least talking about having options and the ability to be able to make better choices for the options in your life.
Know Your Limitations.
With a budget and a financial plan in place you become aware of how much money you have. Knowing how much money that you actually have should keep you from making any stupid purchases. You just may think twice before you sign the deal for a new sports car or go on over-indulgent weekend in Las Vegas.
Sure, you may have earned those things and you may even deserve them, but if you do not have the disposable cash to pay for dumb things like a sports car, your common sense should prevail and you will stop yourself from doing something financially stupid and reckless. With knowing how much money you have you will be able to say to yourself, “No, I cannot afford this so I will not do or buy this”. A man that knows his limits can say such things and not feel bad about saying them.
You Will Hate Yourself At First.
In the beginning of working with your budget as you come to realize some of the many mistakes that you may have made with your money until now, you will probably end up feeling stupid and stressed. This is good. You should feel this way. For a change to take hold, you will need to feel this way. But you need to get through and past these thoughts and feelings. Because once you are able to, and your budget is soundly in place, your level of stress and anxiety about money will go down and may even completely disappear. Wouldn’t it be great to not be stressed about money, at least part of the time?
Knowing that you have options and thus knowing that you can make your own choices instead of always being forced to choose and therefore seeing that you do have some control with your life will be much more than worth the initial and minor pain that you will go through when you first start making your budget. As they saying goes, you need to break the egg to make the omelet.
It Will Get Better
Over time as you build your wealth you just may be able to do some crazy and extravagant things but having the financial ability to do any of those things will have meant that you had a financial plan and that you stuck with it. Having a financial plan will allow to able to make good smart choices and hopefully give you the freedom to make a few crazy choices in your life too. Properly managing your money allows you to have some control in you life and allows you to be aware of the choices that you can make with your money. And any good financial plan starts with knowing where you are. Financially speaking, knowing where you are starts with a budget, so let’s get to it.
Before We Start
You should be making and using your budget regardless of what your current financial situation is. At all times in a mans life, knowledge is power. If you are rich man or a poor man, or a man somewhere in between, the knowledge that a budget can provide is crucial to any mans success for just about all aspects of his life.
As you will see as you read through this article, living your life from a budget does not mean that you need to live your life as a pauper and not have any fun at all. Living your life from your budget may mean some cutbacks and the withholding of some immediate gratification items and events, but you can still have fun and enjoy life. You will just be living your life smarter and more successfully than most people do.
Look, if your spending habits have you digging for pennies before the next payday, it is safe to say that it is time for a change. Unfortunately, running out of money before payday, especially if you do it over and over, causes a lot of undue stress that can negatively affect your health as well as your pocketbook.
However, you can reduce this stress and get back on track with your finances by simply changing your spending habits.
How will you do it?
Managing Money 101: Creating And Using a Budget
By the way, even when the economy is good and you’re living comfortably on the money that you are making, it is still crucial that you use a budget. Of course, we all know this but the first problem with a budget may be with the world itself. Many people cringe when they hear the ‘B-word’ because they think it means that you can’t have any fun or spend any money at all other than for paying bills. That’s far from the truth. Even a tight budget leaves room for fun and a little extra spending from time to time.
Believe it or not, immediate fun is not important. What should be important to you is that you…
Enjoy Greater Financial Power with a Better Budget
A recent survey conducted by Intuit Mint Life indicates that 65% of Americans have no idea how much money they spent in the previous month. Are you one of these 65%? Ignorance will not help you. Ignorance will just about guarantee failure. So, do it now. Create a budget that will help you gain control of your finances!
Creating an effective budget has a number of benefits. By adopting a budget, you can make solid plans to achieve your financial goals and live the good life you deserve. By creating and using a budget you gain financial power!
The best budgets are simple to follow, promote sound financial habits, and do leave some room for a bit of fun and spontaneity.
But First, Try This For Just One Month – You Need To Find Your Starting Line
The first crucial step in creating a household budget that works is to list all of your income and keep track of every dime you spend for a month. Before you can know where you’re going, you have to know where you are starting from.
For one month, keep track of every cent you spend. Avoid hiding anything or sweeping it under the rug. Save all of your receipts and write them down. That means bills, spending money you withdrew from the bank, and anything else that was paid out in that time frame. At the end of the month, you’ll have an accurate picture of what it’s costing you to live for 30 days.
NOTE: When you plan a budget, you must be realistic about what you’re spending and saving. Don’t say you spend $10 per week on lunches if you know you really spend $40. You can change the amounts later and cut back if necessary, but the first step is to get everything down on paper just as it is right now. That way, you can see what you’re really spending. The numbers don’t lie. You fool no one but yourself if you are fudging with the numbers
Now, Be Prepared For The Rude Awakening
Usually, people who create an honest budget by tracking their spending each month and writing everything down find that they’re shocked at how much they’re paying out. It’s not just the bills, but also the little things like lunches and dinners out, coffee in the morning, and small purchases that add up.
- You’ll be surprised to learn where your money goes each month. This awareness alone may change your spending habits for the better.
Six Simple Tips To Lower Your Living Expenses
After you get over the initial shock of your tracking experiment, you’ll likely want to find ways to spend less. There are many ways to lower expenses, and they can depend somewhat on how you spend your income. Everyone is different, and not every idea will apply to each person.
Consider these ideas in order to decrease how much you spend each month:
- Adjust the thermostat by a few degrees to save on electricity or gas.
- Skip going out for lunch and coffee by bringing these things from home.
- Change to a less expensive cable TV, Internet, or cell phone plan.
- Have a yard sale to get rid of unwanted items and make some quick cash.
- Carpool or use public transit, and sell that second car.
- Buy groceries only during sales and stock up on often-used items.
Of course, there are plenty of other ways to save. What works for one family might not work for another. However, in all likelihood, you really don’t need the latest gadgets, newest car, or brand-name clothing. You may want them, but that’s not the same thing.
Now, Try these budgeting techniques:
Top Budgeting Strategies That Can Curb Overspending And Become Financially Sound
1) Make A Master List.
Develop a list of all your loan payments and credit card bills. You’ll expand your awareness about the number of creditors you have, the total amount you owe, and the due dates of your monthly payments.
- On the list, have 5 columns: the name of the creditor, your monthly payment, the due date of each month’s payment, the amount of interest you’re charged, and the total amount you owe.
2) Add Other Monthly Expenditures To Your Master List.
Next, list things like your rent or mortgage payment, grocery costs, gasoline costs, and anything else you pay monthly. Estimate the amounts for your cable, water, garbage, cell phone, and utility bills, using last month’s statements. Your Master List should reflect all your outgoing expenditures.
Do not forget any of these expenses. (Link To Expenses That You Forgot to Include in Your Budget).
Are You A First Time Home-Buyer Or Do You Plan To Be? Maintaining A Budget While Paying A Mortgage Is Crucial For Your Success!
3) Keep Your Checkbook Balanced.
One of the simplest and most productive habits you can incorporate into your personal financial success plan is to maintain a balanced checkbook. Keep track of everything that goes in and out of your account by writing it in your check register or in a spreadsheet. At the end of the month, compare your checkbook to your bank statement.
- When you’re keeping track of what you spend, you may feel less tempted to waste money on impulse purchases. You’ll always know when the money is almost out. This can save you a lot of money on overdraft fees and a lot of headaches.
4) Now, Establish The Real Priorities.
Which bills do you see as the most important? Mark them in some way by highlighting or circling them.
5) Survey The Remaining Bills.
In looking at these non-priority bills, you should most likely discover some areas in which you can lower your expenses.
6) And One Overall Goal Is To Reduce Expenses.
There’s no secret to a successful budget. It’s as simple as keeping track of your income and expenses, increasing your income or lowering your expenses until you spend less than you earn, while also saving for a rainy day.
- Once you have a good grasp on what you’re spending and where, find places to cut back and put the money you save into a savings account for a rainy day. Clip coupons and look for grocery sales. Turn off the lights when you leave the room. Turn the air conditioner off when you leave the house. And cook ahead of time to save on the expense of eating out.
7) Really Examine Frivolous Expenditures.
Are you spending $30 a week on fancy coffees? Do you stop after work for a few beers with co-workers two or three days a week? If so, consider the amount of money you spend for these sorts of activities. Which expenditures can you reduce? Which can you cut out completely, at least for a three-month period? Do not rationalize with yourself why you think you need to keep spending on what are probably frivolous things.
8) Call Your Credit Card Companies To Request Lower Interest Rates.
Make a notation on your Master List of the reduced rates you receive. Also note any companies that refuse to reduce your rates. Make the decision to stop using credit cards with high interest rates. Make the decision to stop using credit cards at all!
9) Use Credit Wisely And Sparingly.
In college, using credit cards can seem like no big deal. Credit card issuers often give special deals and incentives to lure college students into applying for credit they don’t need. With large spending limits and small incomes, credit cards tempted you to live a lifestyle you can’t afford.
- Credit, used properly, can provide convenience and peace of mind in knowing that you’re covered in the case of an emergency. But the temptation is great to live outside of your means and worry about paying for those purchases later. The fewer credit cards you sign up for, the less you’ll be tempted to spend away your future financial health.
10) Again, Take Decisive Steps To Reduce Your Expenses.
For example, if you’re paying out $180 a month for premium cable channels, you have the power to cut your cable bill simply by picking up the phone and calling the cable company. End the rationalization.
11) Determine How You Can Bring In Additional Dollars.
Consider a second job. Then, use the extra money you earn to pay off debts. Recognize you have the power to change things. But you will have to take action and do something truly beneficial and productive.
12) Keep Your Master List With You Throughout The Day.
Each time you’re about to make a purchase, glance at the list and reflect on your bills. Ask yourself if you truly need what you’re about to purchase. Allow yourself to feel proud about this new routine.
13) Journal Your Thoughts And Feelings About The Changes You’re Making.
It’s a challenge to try to change something about yourself, and how you manage your finances is no different. Write down how you’re feeling about adjusting your spending habits. Be optimistic that you can and will change your financial situation.
If you consistently find yourself running out of money, vow to follow these strategies to change your unhelpful behaviors. You have the choice to alter your financial habits in powerful ways. You can do it!
Careful! Don’t get cocky! Avoid These Common Budget Busters
Remember: Before buying anything new think about how much money the unnecessary things are really costing you? Is it worth it? When you really think deeply about those questions, you’ll likely find that living a little more frugally would give you a better quality of life and freedom to do more things, like travel. Keep your list from item 12 above with you whenever you go out.
If you have blown your budget one month, do not get discouraged!
Budgeting doesn’t have to be depressing and minimalist. However, it can give you an accurate picture of what you’re spending. Then, you can decide how to spend less – or if you even want to spend less – and make changes that will benefit you in the long run.
Do You Need Some More Detail?
Continue Following These Steps To Create A Budget That Works For You:
14) Identifying Your Income.
You need to know the amount of your total income before you can decide how to save and spend your money.
- Get started by making a list all of your sources of income, the amounts, and how frequently you’re paid.
- Common sources of income include the paycheck from your regular job, as well as additional revenue streams. Additional income could come from a hobby or in the form of an irregular source, such as money earned from a yard sale.
15) List And Categorize All Of Your Expenses.
When creating your budget, carefully categorize and consider what portion of your income you’re using on various types of expenses.
Many budgeting templates advise you to classify your expenses into two categories: Fixed and Variable.
- If you have difficulty setting aside portions of your income for emergency savings and other financial goals, it can be really helpful to further categorize your expenses in terms of wants and needs.
- Fixed expenses are those expenses that regularly occur for a set amount. Rent or mortgage payments, car payments, and insurance premiums are often different types of fixed payments.
- Variable expenses occur at irregular times or for irregular amounts. When creating a budget, it’s important to have the means to accurately forecast the amount and timing of your variable expenses.
- One sure fire way to save more of your income is to consider whether an expense is a true want or need, and reduce spending on the items that you merely want. This is a bit trickier than it sounds. For example, most of us would agree that food is a necessity, but the type of food that you choose to buy may reflect a want versus an actual need.
16) Yes, You Can Leave Room In Your Budget For Some Freedom And Excitement.
Achieving a proper balance between spending and saving allows you to do things you enjoy while increasing your control over your finances.
17) Consider Both Sides Of The Equation.
Just as you’re tracking your expenses and setting goals to reduce spending, a reminder to also look for ways to increase your income.
- Taking on a second job during your spare time or selling off items that you infrequently use are two common ways to increase your income.
18) Eliminate Tedious Or Boring Budgeting Tasks.
You can maintain your enthusiasm to stick with your budget by using budgeting tools that automatically record and track your financial transactions. There are software programs and apps that can help you with creating and managing your budget. However, before spending more money, you can use a spreadsheet program to start. There are free to use Microsoft Excel alternatives that you can find on the internet. Or you can use Google Docs.
Need some help setting up your spreadsheet? Click here for a How To.
19) Keep Your Budget Relevant.
Review and adjust your budget on a regular basis to account for revised goals, fluctuating costs, and other changes.
Setting up and living your life based on your budget will take some time to adjust. If you have been spending your money like it grows on trees and have been racking up your credit card debt it can take you a a few months or more to adjust. This time will pass and you will be able to manage if you stick with your budget and know why you are doing so. Like any severe weather storm initial budget doom and gloom will pass and you will start feeling good and proud of yourself for sticking to your budget.
In the meantime, you can still have some fun and feel like you are living wealthy on a budget. Initially living your life from your budget will mean some cutbacks and maybe some lifestyle changes but the purpose is not for you to become a self-oppressed slave to your budget. The purpose of a budget is actually the opposite. You need to think about a budget as sacrificing a little today for a much better tomorrow.
The purpose of a budget is to free yourself from stress and to allow you to create the life that you need, becoming independent and then being able to do the things that you are really important for you to do.
Conclusion
A budget is an indispensable tool that can give you greater control over your finances. These tips should make it easier for you to create a realistic budget that will work for you.
Financial pressures can make all of life seem overwhelming at times. When you do implement these simple steps and commit to maintaining a rock solid budget for yourself and for you family, you’ll experience financial peace and prosperity. Beyond that, however, with using a budget every area of your life will improve as you’re more relaxed and at ease with the peace of mind you’ve achieved.
Creating an effective budget has a number of benefits. By adopting a budget, you can make solid plans to achieve your financial goals and live a good, real and meaningful life that you actually earned.
BAM! Be A Man. Do The Right Thing. Take Care Of Yourself And Your Money
BAM! Be A Man. Do The Right Thing.
Be The DtRTy Guy!
