Can you remember the last time you sat down to do your monthly budget? As the adrenaline set in and that wave of excitement began to rush over you, you knew you were in for some fun!
Ok, obviously you can tell I’m kidding. I hope…
Maybe budgeting isn’t quite that exciting, but it is a fundamental part of personal finance that will go a long way toward helping you achieve financial freedom.
Beyond simply putting constraints on your spending, budgeting can do something much more valuable: build awareness!
BUDGETING IS NOT A PUNISHMENT
The negative stigma surrounding budgeting comes from the fact that most people view it as a form of self-inflicted punishment.
You sit down, go through your bills, look at your spending patterns, and then you have to put on a shock-collar connected to your wallet that goes off any time you even think about spending your hard-earned money.
Well, maybe ditch the shock-collar. No electric fences are required when budgeting!
Budgeting doesn’t have to be so negative. In fact, by looking at it in a different way, you can shift your perception of budgeting completely.
I USED TO HATE BUDGETING
I remember when I hated budgeting.
It was such a drag anytime I had to sit down and focus on every penny coming in and out of my accounts. I felt like I was in some sort of bizarre class that forced me to learn a form of Math I wasn’t interested in, only to then yell at myself for any mistakes I made (bad purchases that I didn’t need to be making).
It wasn’t enjoyable.
AWARENESS (KNOWLEDGE) IS POWER
The true value you get from budgeting isn’t the self-imposed limitations on your spending, it’s the awareness of where your money is going.
It is very common for people to have an “ah-ha” moment whenever they finally sit down and do some budgeting.
A typical statement you’ll hear is something like, “I had no idea I was spending so much on X.” It can be truly eye-opening to finally realize where you’ve been allowing your money to flow to.
I use the word “allow” because for many it isn’t a proactive decision, they are just spending throughout their day not really making any meaningful decisions about how their money could best be used.
Being aware of your spending habits helps you, not only when you are actually doing your budgeting, but throughout your daily life. You’ll begin to realize each time that you go to spend money on something that you have been meaning to cut out, making it much easier to say no in the moment. You’ll begin to eliminate the act of buying things out of routine.
ALIGN YOUR SPENDING WITH YOUR VALUES
The true goal is not to simply cut out spending, but to help align your spending habits with your values, and spend your money on things that are truly important to you and that bring you happiness.
Have you ever thought to yourself “I wish I had more money to do X?”
Well, imagine how much happier you’d be if you DID have that money to do what you really wanted?
Budgeting isn’t really about cutting out spending, as much as it is shifting that spending to areas that you enjoy more.
In essence, it’s setting up parameters to help increase your happiness. Not so bad after all!
A TOOL TO SIMPLIFY BUDGETING
I’m still not the biggest fan of budgeting, but I appreciate it a lot more.
I’ve written about it several times, and would much rather focus my time and effort on growing streams of income (How To Create Passive Income And Stop Working) than on trying to cut expenses. (Should You Focus On Cutting Expenses Or Increasing Your Income)
The best way to engage in budgeting is to make it as easy as possible, and take up as little time as necessary.
I use a tool called Mint to help track my spending and help me budget. It is an account aggregation tool that pulls all of your accounts into one place and automatically puts them into categories, as well as creates some nice visuals for you to see your income, spending, and personal balance sheet.
By using a tool like Mint, you’ll let it do 80% of the work for you. All you’ll have to do is go in and make sure it didn’t mistakenly put any expenses into the wrong category.
You can also set spending goals for each category, and the app will inform you when you’re getting close to your limits – once again, increasing your awareness and helping you to stay on course.
All in all, it’s pretty quick and easy.
So, the next time you think about budgeting and begin to get that sad emoji face feeling, remember that it isn’t a punishment. You are simply increasing your happiness by shifting your spending to the BEST areas, and there are plenty of tools to help you through the process!
Capably Yours,
