“ Begin with the end in mind.”
Franklin Covey
Let us all agree here and now that a budget is a plan for how you will use your money. And that it is your roadmap for financial success. While we are at it let’s also agree that budgets were made for man and not man for budgets. They are dynamic and grow with your life circumstances. For consistency, let’s also agree that a budget only works if you actually stick to it.
Ok, so now that we are in agreement can we also look at some of the benefits budgeting brings to your life?
Benefits of budgeting
- You become aware of how much income you get and where your money goes.
Forget an alarm clock, there is nothing like a good wake-up call from following a budget. For those who haven’t embraced budgeting, yet I urge you to first start by tracking your expense at least for a month. I promise you it will be an eye-opening exercise. When I started tracking my expenses, I was surprised at how those small amounts I used for buying unnecessary snacks added up in the month… Those random coffee dates with the girls, they added up too.
- Helps you prioritize what is important to you
Now that you know where your money goes, are you happy do you want to change so that you are more focused on the things that are important to you?
You may even find that you are happy with your expenses, but you need a more structured way to go about your finances. Either way, a budget focuses on what matters most to you.
- Helps you to reach your financial goals as you are more intentional with your income, expenses savings, and investments
Lewis Carroll puts it aptly if you don’t know where you are going any road will lead you there. When you have clarity of where you are going then your financial matters run much smoother. You set goals and can achieve them consistently and on time. You cut out the waste of lost time and money on experiments.
- It helps lead you as a roadmap,because it is dynamic and adjusts to your circumstances
A budget guides you on what you can achieve, given your income. For best results obviously, you need to follow it. However, that does not mean that from time to time you cannot adjust it. Once you adjust it then stick to it and you will love the outcome.
Now that we’ve seen a couple of benefits of budgeting how do we create budgets that we will stick to and not abandon out of sheer frustration? Let’s face it consistency is the key to good results here.
How to make a budget that you want to stick to it
- Align your mindset to the budgeting process.
Begin with the right mindset. Have a winning attitude, even as you budget. A budget is a bridge. The minute you view a budget as an unnecessary restriction or obligation you will lose before you even start. The bridge gets you from uncertainty in your finances to a life of financial independence.
- Write down your overall goals.
Chart a way for yourself. Have a great vision for your finances and then write it down. We have a great tendency to remember what we write. Now break down the vision into manageable goals with timelines and then feed this into your budget and now the work begins. Starting with an overall goal tends to give your budget perspective.
- Use it as a plan to help you reach your goals.
A budget is a tool to help you reach your goals. So set the tool to achieve the goals. After you write your goals down, put them down in a budget to enable you to allocate money towards achieving them.
- Do list down all your expenses, and account for them.
Writing down allows you to have a comprehensive list of your expenses. Many times, frustration comes when you keep adjusting your budget on the go because you forgot to take care of some expenses that come about annually such as insurance premiums.
- Be accountable to yourself or a confidante
Commit to yourself that you will stick to your plan. Where possible share with someone you trust the journey, you are on. Choose someone who will root for you but at the same time call you out when you are slackening. I always find it works well when your accountability partner is also on the same journey as you, that way you are kind of spurring each other to succeed and sympathizing with the struggles.
- Reward yourself for reaching set milestones
As human beings, we respond well to incentives. While budgeting is a long game, It is important to keep yourself motivated otherwise you lose steam midway. So, create opportunities to celebrate and splurge a little (within the budget of course) when you finish paying off debt, I say get the good chocolate, I dare say.
- Adjust your budget to your circumstances
I cannot overemphasize this point. When you feel confined, you will obviously want to rebel. But when your budget is flexible then it serves you well. A budget serves you; you are not a slave to it.
- Build some excitement by having stretch goals that challenge
This will push your limits, but remember good things happen beyond the comfort zone. The best that can happen is you reach your goals faster. You hit your saving goal faster, you invest a higher amount than you thought you could. Getting out of debt faster (yay somebody). Whenever I have extended myself, I am amazed at what I achieved in short periods of time. There is no better feeling. than having a slightly out of reach goal that if you work hard chances are you will achieve.
I know by now you are fully convinced of the great things that a budget will do for you, so I will ask you to do the next best thing, draw up one. If you need a good template, please feel free to download from the resources page the personal budget template.
See you on the other side, my friend!