Many of us already have budgets in place. They’ve been time-tested, and have worked for years. We might think that we’ve perfected our budgeting methods. But sometimes everything needs to be thrown out the window and categories need to be reconsidered. If you want to remix your budget, you’re going to have to focus on a total lifestyle redesign. Hopefully, this article will help you with the beginnings of something new; something truly exciting! Are you ready?
Out With The Old, In With The New
If your budget isn’t working the way that you intend it to work, then you have a problem. Have you ever tried to repair an old car only to have it break down on you again a month later? Corroded budgets are kind of that way. Many times the same old problems surface month after month, and you wonder why things aren’t working! Instead of patching it up, throw the whole thing out like spoiled milk. Then, start from the ground up and build a budget beginning with the essentials.
These, My Friends, Are The Essentials!
So what are the essentials of budgeting that you need to start with? Here they are, heated, cooked, and served!
- Discover your ACTUAL income. This is crucial here. Find your average income per month by looking at at least six months of history. What does the average end up being? If you have seasonal work that causes your income to vary heavily, look at the past year or few years. Finding your average income helps you know how much money you can spend month to month.
- Discover your REQUIRED expenses. Required expenses include reasonable food, shelter, transportation, clothing, and utilities.
- Measure the gap and determine your FINANCIAL FOCUS POINT. The gap I’m talking about here is the gap between your income and expenses. Your goal is to make your income greater than your expenses so you can use the extra money toward your financial focus point. Your financial focus point could be paying off debt, building an emergency fund, or investments. Know that having a financial focus point will help you meet your goals. Don’t try to do everything at once. There’s a season for everything, a time and place for it! Measure how much of a gap you have between your income and expenses. If you don’t like what you see, find ways to lower your expenses or multiply your streams of income.
- Push everything to the MAX. Don’t hesitate rethink every area of your life. Should you move down in house? Should you sell your cars? Should you get a new job? Don’t become satisfied with the everyday automation of life. Remix everything.
- Create categories that represent your NEW LIFE. Your budget should represent an entirely new way of living. Out with the old, in with the new! Pray that God will give you direction as you seek his will for your life.
Uncomfortable Yet?
Starting a budget from scratch is not a comfortable thing to do. It’s more like boot camp, you have to get in the mud and struggle through it. There have been several times where my wife and I had to break through our ordinary budget and do extraordinary things. It wasn’t easy, but boy did it make all the difference in the world!
Hopefully you’re encouraged by this article on budgeting. There are many eBooks out there that show you how you can get a better budget if you need further help. Tell us in the comments about a time you’ve had to rethink your entire budget, and some of the dramatic changes that you had to make. We’re listening – er – reading!
I like the idea of giving your budget a fresh look! A budget is like a set of goals, spending goals, and just like all goals, they should be thoughtfully reconsidered from time to time.
I categorize my own spending as either an expense or a debt payment and split my monthly budget into those two categories. And the difference between the two is important to understand:
A “debt” can be eliminated; pay a debt in full and it goes away; a car loan, for example and a mortgage.
An “expense” cannot be eliminated by being “paid-in-full” because it is more like an on-going cost of living. Examples of expenses are groceries, gasoline, and home utilities.
Although expenses cannot be paid-off like a debt they can be avoided to some extent. You can choose not to have cable TV or a cell phone and thus avoid those expenses.
But what is the critical distinction between the two is that debt represents spending to which you are committed until you do pay it off and, in that sense, represents money you earn but over which you have given up control!
I think creating a budget also helps you evaluate decisions better in the future, which helps to evaluate your dreams and help you be creative in saving money and planning/dreaming of the future.