I have met very, very few individuals that have a budget that works. However, those very few that do have a budget that works have a few things in common:
- Peace of mind, even if there is month left at the end of the money.
- A feeling of power and control over financial matters.
- The ability to say without fear or apology, “I can’t afford that.”
- Long-term financial stability, success and discipline.
- The ability to sleep at night without worry and fear about finances.
Maybe, to sum these traits up in a phrase, “financial confidence.”
However, unless you are born into wealth and trained from birth to manage money, none of these traits come naturally to us. They are born out of and developed through financial education, and I’m not talking about retirement planning or investing in rental income or anything like that. The real key to breaking out of the middle-class or even poverty mind-set we were born to is one simple thing: Awareness.
I’m going to talk about the nuts and bolts of successful budgeting in future posts, but for now, I’m just going to tell you why budgeting has not worked before. Ten reasons. Ten things to overcome.
- Lack of clear goals.
- Unrealistic expectations.
- Planning before understanding.
- Inability to monitor success.
- Inability to reconcile a checking account.
- Lack of determination and commitment.
- Inability to share openly and honestly with others.
- Lack of focus.
- Lack of a clear picture of reality.
If any of these are a cornerstone to breaking out of a financial rut, getting out of debt, saving for retirement and just being comfortable, it’s the last one. And, coincidentally, one of the simplest to overcome. Nothing else will work (if anything else worked you would not be reading this) until you get a clear, inerrant picture of your current financial situation. And you can’t do that until you learn the right way to track your expenditures and reconcile your financial information to your cash and checking accounts, and your debt.
So, interestingly enough, if you want to get out of debt, manage your money better and become financially confident, you have to start with one simple but not necessarily easy step.
Reconciling your money and understanding what is.
- “When you argue with reality, you lose, but only 100% of the time." ― Byron Katie
If the answer to all of these questions is 'yes' then you are well on your way to being ALBE to budget, but if ANY of these are "no" then you have some preliminary work to do. YOU MUST KNOW WHAT YOU ARE SPENDING NOW ON EVERYTHING.
You can learn to do this, one step at a time. And once you do, the rest of your financial life will fall into place. You’ll get control of your money and your life. You’ll sleep better at night. You’ll be able to take a vacation and pay cash for it. Buy a car and pay cash for it. Experience and emergency and not have to worry about money. Imagine what that would be like, to pay for college, buy a new computer, take the kids to a movie, all without using a credit card or running out of grocery money.
All of this you can learn to do. And, once you get started, you’ll be hooked. You’ll like the feeling of being in control and you’ll want more. You’ll get better and better and financial management and THEN you can tackle retirement planning and passive income and getting out of debt. But horse before the cart. YOU HAVE TO START TRACKING EVERYTHING YOU ARE SPENDING RIGHT NOW TO THE PENNY.
TO. THE. PENNY.
If you cheat, or get lazy, or estimate, you will fail.
It’s that simple. Everyone who tries to take a short-cut ends up at the same place - still lost in the jungle.
This is where commitment comes in.
I WILL GIVE YOU THE TOOLS TO GET CONTROL OF YOUR FINANCIAL SITUATION.
I’m not selling anything. Just giving away information that will help you.
Next week - how to track your spending accurately for one year, and why, and how to make it more like a game than a chore.
Don’t say, “Oh, I already do this,” or, “I know how to do this.” If you did, you’d already be out of debt and well on your way to financial freedom. This is THE MOST IMPORTANT financial tool you will ever learn.
So, if you want it, subscribe to this blog, or follow the archives, or send me an e-mail and ask me for these posts in order. Take charge of your life and money NO MATTER WHAT YOUR CIRCUMSTANCES ARE. No excuses. No blame. None of that matters now. All that matters is this moment, right now.
Start right where you are and paste this somewhere on your wall.
“You are either working your own plan, or you are working someone else’s.”
Next week: STEP 1 - EMBRACING REALITY