What does it take to be successful in managing your money? Just a little over 7 years ago, our family began a life changing journey with our money. Based on the results, I feel I can answer that question from my own experience. The truth is that having a working budget every month is the key to winning with your money.
If you develop the skill of budgeting, you will unlock all the potential of your income. With that in mind I would like to answer 7 questions you might have about doing a budget.
After you review these 7 questions I urge you to take the 30 Day Budget Challenge sponsored by Jeff Ehrlich (@DebtFreeSquad). Jeff introduces a 30-day budget series that will guide you every step of the way. Lift the burden of debt, and take on the 30-day Budget Challenge!
7 Budgeting Questions
- Is having a working budget absolutely necessary to manage my money? Yes. A working budget is fundamental to your success. If you can’t control your money via a budget, you can’t build savings, you can’t pay-off debt, you can’t plan for the future.
- Can I budget even with a limited income? The reality is that whether you make $40K or $400K, you need to do a budget. A budget gives your income more muscle because when you know where every dollar is going, you will avoid wasting money. And, when you stop wasting money, you can begin to live on less than you make.
- Is budgeting hard? Not really. The mechanics of setting a budget are simple. It’s a matter of simply listing all your income on one side of the column and listing all you planned expenses on another. Make sure you “spend” every dollar on paper first. This means, allocate your available income to a spending category.
- I am not good with numbers, what tool should I use? You can use something as simple as a yellow pad and pen or something more involved such as an Excel spreadsheet or a computer program such as Quicken. Today there are also tools on the Internet such as Mint.com or YNAB. Use the tool that fits you, but make sure you use something! For me, an Excel spreadsheet has served me well for the last 7 years.
- Do I have to prepare a budget every month? The answer is yes simply because every month is slightly different. For example in one month you might have more birthday celebrations than others (for us June is a big one). Also things such as registration or inspection fees for your vehicle are not due every month. And of course Christmas expenses are very different than say Easter expenses. The more you carry on the practice of doing a budget, the easier it will be to manage the differences every month.
- Does doing a budget take a long time? No. It might take you longer the first few times you do it as you gather information on your bills and get a hold of historical data on your spending. But after the first few months, it will become a routine. For example, after 7 years I spend less than 20 minutes drafting our monthly budget.
- I hate talking about money, can’t I just leave it to my spouse? No. If you are married, you both need to be involved in money discussions and decisions. You each have a vote. One of you maybe more naturally inclined to handle the mechanics but you both have to be in the game. You are building a life together, surely you can handle money together. And if you are single, you need someone in your life who loves you well and who will tell you the truth. That person should review your budget to give you direction and ask the tough questions.
Do you have any other questions on budgeting? Share them and I will be happy to answer them! Remember to take the 30 Day Budget Challenge. Happy budgeting!
- Use Mint.com to Keep Your New Year’s Resolutions (provided by PT Money)
- Interview with a YNAB super-user (provided by MoneyPlanSOS)
- Take the 30-Day Budget Challenge!