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You read it everywhere. You hear it everywhere. Budgeting. “You need to create a budget”; “you need to follow a budget.” Starting a budget is not an easy task. Believe me, I know. If you have never made a budget before, the process can be overwhelming. Not only is it a lot to do when it comes to tracking expenses but it can be emotionally taxing.
Many people think of budgeting as a bad thing but it is really just a plan for your money. Budgeting can make sure you can all your pay bills AND enjoy your favorite guilty pleasures AND be prepared for unexpected emergencies. That all sounds great and I am sure that is not the first time you heard it.
When it comes to creating a budget for the first-time, there is lots of information that the financial experts forget to explain. Making a budget is not all about numbers. Although the numbers are the biggest part, it is not 100% of budgeting. When creating a budget, you will battle having logic versus the emotional attachment to your money. These are some of the things I have come across in my many years of budgeting.
I always knew that I liked to dine out but I didn’t know how much until the amount was staring me in the face. It was hard to realize that I spent so much money on something and I had nothing to show for it. If you would have asked me how much I spend on food before I made a budget, my number would have been WAAAYYY lower than the actual amount.
and “miscellaneous” aka random spending. When you have nothing to show for your spending, it is easy to forget that you spent money. Going to the movies, getting your hair done, and eating at restaurants can all be forgotten about a week or 2 later which are why your spending habits will shock you.
Although I wished logic ruled every time I need to make a decision, the truth is my emotions are what have the final say in my decisions. We all have financial needs and wants. We need to pay for shelter, food, and transportation. We want the latest cell phone, bigger house, and better car. Sometimes the line between knowing the difference between needs and wants gets blurry. Yes, you need a house or apartment to live in but does a family of 4 really need 6 bedrooms and 8,000 square feet? Probably not.
The “blurry” decisions are when your emotions take over and you start to justify the bigger (and not needed) purchase. You convince yourself that you NEED an 8,000 square foot house because you WANT an office, guestroom, workout space, etc. Most people are emotional spenders and salespeople know that. Try not to let your emotions fog up your vision of your goals.
All this talk about making a budget may sound simple but the reality is that it takes work and it cannot be done in 15 minutes. Creating a realistic budget that you will actually follow requires knowing and learning your spending habits.
NEWS FLASH: There is a 99% chance that will not stick to your first budget!
Budgets change month by month, week by week, or even day by day. Your first budget is just a starting point so you can learn your spending habits. If you fail at your first budget (which you will), change it. Adjust your budget and try again. I have been budgeting for over 10 years and I STILL make adjustments to our budget. Life happens: babies, job loss, and unexpected emergencies; it is important to change your budget to fit your life.
There are going to be times that you are going to want to give up. Budgeting takes a long-term commitment. Unfortunately, all of your money problems will not be fixed over-night when you create a budget. A budget is a plan to reach your goal. Whether you are trying to get out of debt or save money, a budget will help you get there but it will take time. The key to staying motivated is to reward yourself.
Rewarding yourself during your financial journey will help you stick to your budget. For every debt you pay off or every $1,000 you save toward your goal, have a mini celebration. Reward yourself with something you can actually look forward to. Some ideas are going to your favorite restaurant, getting a manicure and/or pedicure, or just having a day to yourself. Whatever the reward, make sure you follow through to help you stay motivated.
Budgeting for the first-time is a big step in your financial journey. You can do it. It’s not going to be easy but it’s going to be worth it.
What tips do you have for first-time or new budgeters?