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How to be Budget Savvy


By Karen Neorr

Owner and Finance Coach, The Savvy Finance Coach

The first thing I hear when I mention budgeting to most people is a disgusted groan or a disheartened sigh. To my nerdy dismay, most people find budgeting boring, confusing or too complicated, and although they might think it could possibly be useful, it’s usually something at the bottom of the priority list. But shouldn’t your financial health be at the top of the list? Believe me when I tell you this – if you are struggling financially, make budgeting a priority and you might possibly change your life.

The Budget Explained

For starters, what is a budget? A budget, simply put, is a spending plan. It consists of estimated income and estimated spending over a set period of time. Now, that’s not a very scary definition… Budgeting doesn’t need to be complicated or scary, it can be as simple or as complex as you want it to be. For example, it can be as simple as this sentence: “I’m going to bring home approximately $3,000 this month and I’m not going to spend more than that.” Of course, once you create your plan, you need to track your finances to ensure it’s a good fit. If your budget is as simple as the sentence above, all you need to do at the end of the month to check yourself is: 1) add up all of your income for the month; 2) add up all of your spending for the month; and 3) subtract spending from income. What is powerful, even from this example, is the result you’ll get at the end of the month and what you learn from the process. Many people who don’t budget or don’t have a plan, are shocked when they actually run the numbers.

Budget Options

Notebook and Fountain Pen

There are so many options when it comes to budgeting which can be intimidating. For those that don’t want to be bothered by technology or complexity, all that is necessary is a pen and paper. Write down what you expect to earn and spend over a set amount of time and then actually track those things so you can compare the estimates to actual. If you are more computer savvy, a simple online search will provide a person with plenty of spreadsheets to test (yay spreadsheets!). Most banks offer budgeting tools or software for their members. Finally, there are too many software programs and phone apps to mention here, but a simple online search will provide plenty of reviews and options to choose from.

The Budget Surprise

Most people discover through even the simple budget exercise above, one of many surprising results. You may discover you are spending more than you make. That is a huge red flag, warning you that if you don’t make some changes, you’re headed for the poor house (or maybe that’s why you are already there). If you have money to burn; this might not be a big deal, but that is rarely the case. Even if you aren’t spending in the red, you might be surprised to realize how much you spend frivolously. Too many of my clients are appalled at how much they spend a month on eating out, coffee shops, clothing, gifts for others, or other frivolous expenses. Or, you might discover that spending isn’t your problem, but the income part of the equation is the problem. Whatever you discover, it is usually enlightening.

Financial Report

Is a Budget for Everyone?

Of course not. There are plenty of financially successful people who do not keep a budget. How do they do it? They must be rolling in the dough… Not necessarily true. There are many tools that help people get ahead financially, other than keeping a budget. But a financially savvy person will at least have a plan in place to ensure their financial success. They might use cash for their expenses, they may be implementing automatic savings and retirement programs, and they may make personal choices to avoid debt. Each of those techniques are proven strategies to get ahead.

The Takeaway...

If you feel like you are struggling financially, and not sure why, I highly recommend that you create a budget. This is simply the easiest, cheapest and quickest way to definitively find the root cause of that struggle. I feel certain that if you track a budget for at least 30 days, you will be enlightened. If you are surprised by the results and feel motivated to make a change, keep it up. Track your budget for 90 days and you will begin to implement some life-changing habits that will get you on the path towards financial success. I have no doubt that you can do it.

My last words of advice, if you create a budget, but are struggling to implement or determine what changes you can apply to make a positive impact, you should consider hiring a personal finance coach. A personal finance coach can serve as a teacher and accountability partner for you as you work towards developing sound money management habits and a secure financial future.

Stacks of Coins
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