Unless you control your money, making more won’t help. You’ll just have bigger payments.
— Dave Ramsey
A budget is that necessary, lesser of the two evils, part of our personal finances that we need in order to gain control over our money and our spending. A budget, in simplified terms, is just an itemized summary of income in and expenses out for a specific range of time, typically a month. Almost everyone hears the word budget and automatically starts to think of words like, restricted, boring, limiting, drag, and ugh! I want to put these words on their heads, budgeting should be more about freedom, liberation, efficiency, and future!
A budget done correctly will show all the income coming in and all of your expenses that you need to cover. All area of spending should be accounted for and all incoming income as well. A budget needs to be seen as a tool that will let you set financial goals and show you how your maintaining them.
"One reason people resist change is because they focus on what they have to give up, instead of what they have to gain."
—Rick Godwin
Budgeting can save you money, as well as allow you to have more to spend by letting you make the most of your money. Your budgeting system along with your goals and values can determine how successful you are at budgeting.
Sitting down and deciding you need to budget is one thing but, it's entirely different to execute it. The majority realize that, even though they don't manage to budget successfully. Quite a few individuals will even sit down, take a look at their expenses and come up with their ideal budget that still allows them to continue to spend money on the things most important to them. Then they also set goals that just can't be achieved. To be successful at budgeting you need to take a bit by bit approach to budgeting and to stop making budgeting excuses or major budgeting mistakes. We have put together a series of multiple parts and doing these in order will make it easier for you to set up your budget successfully.
One of the biggest reasons most people fail with budgeting is that they don't believe in the budgeting process. They have a difficult time determining how a budget will improve their finances or allow them to do the things they really want to do. There are also some that may feel like they are too poor to budget. There are also those who believe that things will work themselves out. Before you sit down and invest the time to figure out the numbers for your optimized budget, you need to decide what your budget will do for you. If you understand that your optimized budget will help you get out of debt and gain financial independence this can help. You might even want your optimized budget to help you figure out how to purchase a home or to save money to do the things you love. You might have that dream vacation you want to take.
“The most important factor to growing your financial stability isn't your income. Rather, your success is much more related to how well you keep your eye on the ball. Organize your finances around the principles of financial stability. Aim for that goal, and over time you will find many unexpected ways to actually put money aside.”
― Erik Wecks
Now, once you have your reasons for creating your optimized budget, you can then set up your budget spreadsheet. Setting your goals and values will give you the guidelines you will need when you have to make those tough choices to ensure your optimized budget work. Putting down your expenses and ensuring they equal your income is one of the simpler parts of this entire optimizing budget process. As you set up your optimized budget make sure that it includes everything so that you have a very accurate and clear picture to reach your goals.
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