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Secrets
7 Secrets to Successful Budgeting
1. Budget the right way.
What is the right
way to budget? Try not to spend too much time thinking about this
one. The answer is (drum roll, please)- the way that works. If you
were waiting for a good definitive answer we hope you are not too
disappointed by its ambiguity. The reality is, the right way to
budget often depends on the individual. So when being presented
with what might be billed as "the only budget method you'll
ever need," remember, it will probably be one of three things.
Either it's just what you've spent your whole life looking for,
something fit for the trash can, or a springboard for an invention
of your own.
2. Be realistic.
Wow! As Woody Allen once said "… I believe in reality,
but I try not to let it control my life." Most individuals'
lives are controlled by wishful thinking. This is great if it doesn't
involve personal finances. If it does, small things like rent eventually
sneak up on you. So, when thinking about income and expenses, question
all your assumptions. After that, fudge the numbers a little. Make
your estimated income a little lower than you thought and your expenses
a little higher than you thought. If you make a mistake it is going
to favor you.
3. The budget must be attainable.
After you have listed all your income and expenses you will need
to see if it comes out in shades of black or red. We like black.
That means after you have met all your financial obligations, there
is still a little change rattling around in your pocket. If it comes
in red (actually, anything darker than a light pink), you will need
to start snipping out a few of those expenses or starting moonlighting.
Remember, budgeting is about getting and making choices - not losing
them. And it is the choices that can really make you put this off
(especially if you have to do it with someone close to you).
4. The budget must be sustainable.
After going through step three you decide (in a state of panic)
that if you buy no groceries for the next six months your budget
will be under control. The down side to this plan is that it leads
to sickness and death - not such a good idea. When thinking about
remedies to your budget, think about things you will be able to
keep doing six months or a year from now. A moderate lifestyle change
rushes to mind. It can be painful at first but a good "sustainable"
plan can lead to important lifestyle changes. Imagine yourself as
incredibly wealthy and still steaming envelopes so you can use them
again.
5. It has to be convenient.
It is no secret that our lives are pretty cluttered already without
adding a lot of new and detailed paperwork. Budgeting is no exception.
But, while we are not always advocates of the "carry-a-little-piece-of-paper-with-you"
strategy, we know it works. In fact, the more detailed you are,
the more likely your budget will work. The bottom line, though,
is that if it's not convenient to keep track of your budget, you
will eventually stop doing it. So, try to find ways of keeping track
of your income and expenses that will fit in with your daily routines.
One idea is to take your normal monthly spread sheet and put it
on the side of your refrigerator with magnets. Then, every time
you go to the refrigerator you will have the opportunity to contemplate
the inner workings of your budget. On the other hand, you might
develop a negative association between snacking and budgeting. Use
your imagination.
6. The budget must be followed.
This seems pretty obvious, but CCCS still counsels people who think
that "extra" money in their pockets got there through
spontaneous procreation. Not likely, say most scientists. We think
that little "extra" money is spoken for in the budget
- unless the budget put that money in your pocket.
7. The budget must be reassessed
on a regular basis.
The odds that you are going to plan the perfect budget after one
episode of number crunching around the kitchen table are pretty
remote. Somewhere around the third or fourth month of budgeting
you may decide that $100 a month will not take care of the groceries
for a family of five. Further, you may decide that this assumption
was the product of one session of number crunching around the kitchen
table (and that you were in a hurry to stick it to the side of your
refrigerator). If your original calculations were off the mark,
it only makes sense to adjust them (just remember items three and
four).
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