The Best Way to Control Your Spending

Have you eaten any food today, dear reader? Do you feel hungry, even hangry? No one likes feeling their empty stomach rumble!

How about a bowl of cereal?

Better yet, how about a nutritious, filling salad?

Not good enough? Come to my steakhouse and enjoy a nice filet mignon, with a side of broccoli and potatoes!

There are so many options to fulfill your needs that it can be confusing to know where to begin or what messages to listen to. You know you can’t go too long without eating (roughly three weeks) or you’ll eventually die. But you have your choice of what to eat to stay alive. Companies know this, and they create all manner of products to help meet your needs. They are also becoming increasingly adept at creating things you don’t need while simultaneously becoming more sophisticated at convincing you that you need it. That’s a huge problem, especially if you want long-term financial success.

Why it’s hard to control your spending

We live in a world that encourages us to spend on things we don’t really need. Our perceptions are shaped by companies concerned with profit. Marketers pay top dollar for advertising campaigns that get you to buy items that you may not even be able to afford or hurts you in the long run. They won’t care if their food makes you healthy or sick or broke, as long as they make money. Companies need to grow to make their shareholders happy. Your success is not their goal.

In order to protect yourself from falling into the spending trap, you’ll need to accept that the world doesn’t care if you succeed. Your success needs to be your number one priority, as their success (even at your expense) is their priority. It’s your responsibility to control your spending and meet your financial goals, not theirs. It’s unfortunate that companies’ goals are sometimes at odds with our own, but that is how it goes in the world we’ve built. Choose to break out of the mold. Know what you want and put yourself first.

The best way to control your spending

Now that you know you need to take responsibility for your success, how do you do it?

Spend on what you need

It’s up to you navigate the unlimited wants and to figure out what you actually need. Do you need to go for a steak dinner if you could use that same money to buy groceries for a week? Do you need the newest iPhone when an older model would work just as well? It’s up to you to decide.

Buy things you can afford

If you have a budget, you should already know what you can or can’t afford. Trust your budget and use it to buy what you need when you have the money to do so. I wouldn’t tell you not to buy that iPhone. I would, however, caution against buying an iPhone on credit, or buying it and then not being able to keep your lights on in your house or gas in your car. You can always save up for it if you really, really want it.

Stick to your financial goals

Your financial goals are your plans for your life. If what you want to buy negatively impacts or dramatically slows down your goals, then you should consider a cheaper alternative. It’s not worth buying a $700 phone now when it prevents you from funding your emergency fund. Wait to buy it, or choose another item that better serves your needs.

Put yourself first

Personal finances work for those who work at them. By keeping your goals in mind, sticking to your budget, and buying what you need, you can be successful at budgeting in spite of our consumer culture. Having an accountability partner or a coach can help as well. And remember to put yourself first. Make sure what you buy fits your needs and you’ll be well on your way to controlling your spending.

I’m rooting for you.

Why You Don’t Budget (and what to do about it)

What’s holding you back from budgeting?

Everyone has their reason for starting a budget, as well as their reason for avoiding doing it. I personally started budgeting because I decided it was better than being broke and confused about my finances. It was one of the best choices I’ve made to date.

I think budgeting can change everyone’s lives and relationships with money for the better, but not everyone wants to budget. It’s your choice either way, but I want to support you in your journey if you want to learn to be a better money manager. So if you’re at least curious about budgeting but are struggling with getting started, let’s look at some reasons why.

You don’t think budgeting is worth your time

“I don’t think budgeting is effective, I’m doing fine enough as it is”.

You don’t see a point to budgeting money because you’ve never seen anyone’s life get better from budgeting. You’ve had friends cancel plans or suggest cheaper options because it “wasn’t in their budget”. Or you go out together and they order appetizers and soda. That’s not your idea of the good life. You can spend all the money you want of what you want and have enough left to spare. You aren’t broke, and you have no problem paying your bills. Therefore, you don’t think budgeting is very effective or useful. Why go through all that trouble to restrict yourself if you aren’t going to see any real results?

What you don’t see is that your friend has a plan. Your friend is spending what they have budgeted for entertainment, and they aren’t going to break that plan. Why? Because having an emergency savings account is more important to them than drinks at the club. They are focused on their long-term goals, not their short-term fun. Therefore, it’s nothing personal, but they aren’t interested.

Budgeting is like dieting. You have to set your goals, make your plan, and stick to it. You may not see a ton of results right away. You may have to deny yourself from some fun experiences along the way. But eventually you’ll see your efforts pay off, and you’ll be glad you put in the work.

You don’t care enough about money to make a budget

“There is more to life than money”.

You’ve decided to not spend your time worrying or focusing on money. You don’t want to take part in a system that hurts and disenfranchises people in the pursuit of profit. You’d rather help people and focus on the things that really matter to you.

You can still benefit from learning about money because you most likely live in a society where you have to depend on money to survive. You still have a job and need money to make ends meet. Therefore, understanding how to budget will help you manage the money you have so you can go back to focusing on the things that matter. It sounds counter-intuitive, I know, but you can lessen the impact of money on your life if you understand how it functions.

You’re worried your budget will show you something you don’t want to see

“I do not want to see how much I truly owe. I’d feel embarrassed and ashamed at the depth of my financial woes”.

You know you need to make changes with your finances, but you can’t bring yourself to get started. You know you won’t like what you see. You’ve been neglecting some of your bills and things may be past due. You don’t want to know how much you owe. Or you know you won’t like to see how little money you have left over after paying bills, because you wish there was more.

Money is a difficult topic for a lot of people. We sometimes develop values and habits around money that tell us we should be ashamed of where we are financially, or that we aren’t doing well enough in relation to other people. The problem is, those thoughts hold you back and keep you doing poorly. They are not your friend and they do not help you grow. If you choose to accept where you are financially, you can take action and begin to make changes. Your progress may be slow, but you will make progress. You will change your habits and your life. You just need to believe it can be done.

So why don’t you budget?

Some people don’t want to budget because they think it’s not worth their time, they don’t want to face the truth of their finances, or they don’t care enough about money. If there are other reasons why you/others don’t budget, let me know. I think it’s worth understanding your motivation for your choices either way, and doing what is truly best for you.

If you are ready to learn to budget, you’ll find the resources you need here at Let’s Make a Budget. Please reach out; I’m happy to help!

6 Incredible Reasons to Make a Budget

Budgets are incredible financial tools that help you manage your money and meet your goals. If you’re looking to bring more order to your financial life, you could benefit from making a budget. Here are six reasons why making a budget is the right choice.

Your finances will improve right away

The moment you complete your budget you’ll immediately get a better sense of how you are using your money. There’s no way around the truth of how you spend and save when it’s all laid out in front of you. From there, you’ll be able to choose to spend more wisely, and you’ll see your finances change in front of your eyes.

Budgeting will save you time and energy with your finances

With your financial plan laid out before you in a budget, you’ll be able to think less about money as you go about your day. As long as you follow your budget, you’ll know you’re making the right choices with your money; you’ll have thought through how much you want to spend and on what ahead of time, so there will be no reason to worry. That means more time for the things that really matter to you.

You will make better choices with your money

Your budget will help you assess your spending habits and help you put your money toward your goals, allowing your money to do what you most want it to. Want to save more? You can add more money toward your savings goal. Want to pay off a student loan? You can take extra money from one category and put it towards that bill. By being more intentional with your money, you cut out waste and use it more effectively.

Budgeting is the best investment you will make

Because you make wiser choices with you money, you accomplish more of your financial goals faster. Because of this, your savings will grow larger faster; you’ll be able to invest more; and you’ll be able to live comfortably without debt.

Additionally, your journey to money mastery and financial independence goes through budgeting; it’s the foundational step in controlling your money and your spending habits. This knowledge and experience will pay dividends in the long run as you apply those lessons and values to investing, running a business, and any other activities that require more complex skills and understanding.

You have time to make a budget

Budgets don’t take a lot of time to make. Even if you aren’t planning on making it during this quarantine, you will be able to make it at any point, in a matter of minutes. Creating a budget is super simple if you have all your materials and set aside the time to do it. Sure, honing and revising it will take additional time, but you can set up your initial budget in under an hour.

It’s never too late to learn to manage your money

Time is always a factor when it comes to saving and investing; the earlier you begin, the better. However, that’s not to say that you shouldn’t start today, wherever you may be in life. You can always benefit from learning to manage your money, for the skills and habits you gain will always have a positive impact on your life. There’s no way around that truth. In order to start benefiting from budgeting, you simply have to decide to get your finances in order, and then take action.

Make a budget today

Making a budget is one of the best choices you can make to improve your finances. If you want to get started with your budget, check out my budgeting guide. If you want personalized, in-depth support, consider money coaching with me.

Good luck and happy budgeting!

The Beginner’s Guide to Budgeting

Imagine a world where you always have enough money. You’re confident that your paycheck will cover all your bills and you can easily pay them on time each month. You know how much you can afford to spend on food and other necessities, and you know how much money you have left to save or spend on drinks on the weekend.

In this world, nothing catches you off guard. You aren’t stressed or worried about making ends meet. You’re in control of your money. Your money is not in control of you.

Do you like this world?

Your new budget is the first step toward achieving this better way of life.

Budgeting: the key to mastering your money

Your budget will be your game plan for your money. It will align with your goals and values and help you stay focused. It will let you be proactive with your money and will make sure you use it intentionally.

This guide will help you learn how to make a plan for your money so that you get the most use out of it. When you finish your budget, you’ll have a plan to spend or save what you make; there won’t be any way for you to lose track of it or “accidentally” spend it. No excuses. Not anymore. You’ll be spending your money on purpose from here on out. Then you’ll be able to achieve your financial goals and have the peace of mind that you deserve.

Make a budget today

Before you get started, you’ll need the following information:

(Recommended) Financial Goals. It’s helpful to have goals when you get started so you know what you’re aiming for. If you don’t have them right now, that’s OK. You can still go through this process. But you WILL need goals.

Budgeting Method. You’ll need a system for writing and tracking your budget. You can also use a pencil and paper, but I recommend tools like Microsoft Excel and Google Sheets. They make budgeting faster and allows you to make edits quickly.

Income. Know 1) your total income and 2) the amount per paycheck. For instance, if you get paid twice a month, you’ll need both of those pay amounts.

Expenses. Know all of your monthly expenses, including minimum payments and remaining balances for all debts, and exact payment dates. You’ll also need to have any recurring expenses that are not bills, such as groceries, hair cuts, savings, dinner out, etc.

Sample Budget

This is the final post in my Free Budgeting Guide. To get caught up, click here.

You’ve put in the work to create your budget and adjust it to fit your goals. How does it feel?

Before we wrap up, we’ll review a sample budget and optimize it for three months. It’s important to take this step because it’ll help you see how you can use your budget to achieve your goals over time.

This budget is the same budget used in the previous steps of my Free Budgeting Guide, found below:

NOTE: This sample budget does not include interest, which will affect how quickly you pay off any outstanding debts.

Sample Budget:

This budget has $1,111.00 left to be allocated. $249.00 remains from the 1st paycheck, and $862.00 remains from the 15th paycheck.

You need to make sure this additional money is being used so you don’t accidentally spend it in the wrong places. You need to make a plan to spend this money.

Month One:

The goal is to get the “Paycheck Remaining” lines down to $0 so that all of your money is being used intentionally. Here’s an example of how to do that:

1st Paycheck: Increase savings to $175.00. Pay an extra $149.00 on the Chase Credit Card.

15th Paycheck: Save $214.00. Pay off the Chase ($101.00) and Capital One ($600) credit cards.

Month two:

Now that both credit cards have been paid off, you have an additional $53.00 in your budget. This leaves you with $1,164.00 remaining. You need to make a plan for this additional money. For example:

1st Paycheck: Continue saving $175.00. Increase Student Loan Payment 1 to $494.00.

15th Paycheck: Continue saving $214.00. Make an additional payment of $701.00 on Student Loan Payment 1.

Month three:

In your third month, you have $1,249.00 remaining in our budget. Why? Because, you’ve paid down your debts and reduced your total expenses. And by paying extra on Student Loan Payment 1, the total amount is just $260.00. That can be paid off this month, and you can find ways to use the rest of the money in your budget. See below:

1st Paycheck: Pay off Student Loan Payment 1 ($260.00). Continue saving $175.00. Make an additional payment of $234.00 for Student Loan Payment 2.

15th Paycheck: Continue saving $214.00. Increase Student Loan Payment 2 to $981.00.

Results:

In just three months, you were able to do some impressive things with the money left in your budget:

  • Pay off $850.00 worth of Credit Card Debt.
  • Pay off $3,575.00 worth of Student Loan Debt.
  • Save $1,167.00.
  • (REMINDER: This sample budget does not include interest, which will affect how quickly you pay off your outstanding debts.)

None of this would have been possible without first making a budget. It’s the only surefire way to be clear about your finances and to make a plan for how to use them. This may be an example, but think about what budgeting and focus can really do for you.

Thank you for taking the time to read and use my Free Budgeting Guide. I want to see you succeed, and I hope you find it useful. If you have any feedback or suggestions, please let me know. Additionally, if you want more personalized support, consider one-on-one coaching with me. You can also find a ton of helpful information on my blog.

Until next time! Be well,

Tim Booker

Adjusting Your Budget

This is the fourth post in my Free Budgeting Guide. To get caught up, click here.

Adjust your zero-based budget

Now is the time to make a plan for all of your money. If there is any money left in the Total Remaining part of your budget, you must allocate it all so that it reaches zero!

In the budget above, there’s $1,111.00 remaining. That comes out to $249.00 and $862.00 per paycheck. What can you do with this additional money?

Let’s say the goal is to save and pay off your debts. You could do the following:

1st Paycheck: Increase your savings from $75.00 to $175.00, and make an additional Chase Credit Card payment for the remaining $149.00.

15th Paycheck: Add $214.00 for savings. Put $101.00 toward the Chase Credit Card debt (instead of the minimum $23.00). Lastly, put $600.00 toward the Capital One Credit Card debt (instead of the minimum $30.00).

These changes used all the remaining money and took the budget to zero. This is EXACTLY what you want for your budget.

In the next post, we’ll look at the changes to this budget over three months so you get an idea of how a zero-based budget can help you achieve your goals.

If this was your budget, how would you handle the remaining money? Would you do anything differently? Why?

Monthly Income

This is the third post in my Free Budgeting Guide. To get caught up, click here.

Include your take-home pay

Add your total take-home pay as well as the amount you make per paycheck. Don’t worry if your pay varies each month; you can adjust these numbers each month as you get paid.

Calculate the Total Remaining Pay

Subtract your total payments from your total take-home pay. You know now how much money you have remaining each month after paying all of your expenses.

Find the amount remaining per pay period

Subtract each pay period’s take-home pay from its expenses. This amount should equal the Total Remaining Pay that you found above. You now know how much money you have left at the end of each pay period.

Double-check that all your amounts are accurate and that everything is calculate correctly. You want to make sure everything is right as you move on to the final step: Adjusting and maximizing your zero-based budget.

Payments and Expenses

This is the second post in my Free Budgeting Guide. To get caught up, click here.

List your fixed payments.

Things like rent, utilities, and subscriptions.

If you have debt (think credit cards or student loans), include only the minimum payment amount for each. You will adjust these amounts as you get further into your budget. Include the total balance of your debt in a separate space so you know how much it’ll cost to pay it off.

Add all your recurring payments to get the total amount.

Include your variable payments

Include recurring items that you pay for each month, but don’t have a bill: groceries, gas for your car, bus pass, savings, hair cuts, etc.

Don’t know how much you spend each month on these items? Give it your best guess. You can adjust these numbers later.

Add all your variable payments to get the total amount.

Add all your payments to get your total expenses for the month.

Add your fixed and variable payments to figure out how much you pay each month. This is the (minimum) amount of money you need for the month. If the amounts seem off, remember that you’re just starting your budget. You can adjust these numbers later.

When do you make payments?

List all of your expenses according to when they need to be paid. This will most likely be around the 1st of the month and the 15th of the month.

Calculate the total amount you pay per paycheck as well.

Tip: Try splitting your additional payments between the two pay periods. For instance, if you want to budget $200.00 for groceries, you can use $100.00 from your first paycheck and $100.00 from your second paycheck.

Make sure that the amounts per paycheck still equal your total payments calculated in the previous steps. If the math is off, take a moment to find and correct the error(s).