I’m proud and honored to be part of Women’s Money Week, a week that’s all about “encouraging women to speak up about money, take control of their finances, and reshape their financial futures.” Each day this week, I’ll be writing about a specific topic that relates to women & finances. Today’s topic is Budgeting.

As someone who’s particularly interested (and invested) in my financial situation and stability, I’m constantly amazed by the amount of people who shy away from budgeting simply because of its emotional impact. I’ve heard over and over again about how people avoid creating a budget, how they ignore their monthly cash flow until it catches up with them at the end of the month, and how they pretty much stick their heads in the sand whenever the word ‘Budget’ is mentioned. To put it bluntly, this behavior needs to stop. Yesterday.

While it’s easy for me to say these things considering how far I’ve come financially, it certainly wasn’t always a simple act of typing the numbers into my Excel workbook each month. It’s taken me years to get where I am today, and it will take even more to get to where I want to be. The message here is that if I can do it, pretty much anyone can!

Reasons why we view ‘Budget’ as a four-letter word:

• Budgets are often associated with deprivation and restriction
• Budgets are scary
• Budgets force you to look clearly (and honestly) at your financial situation
• It’s difficult to budget successfully at first
• Budgeting takes hard work, dedication, and an investment in time, energy, and emotion
• It’s easier to ignore our financial situation than it is to take control of it

 

Reasons why we should NOT view ‘Budget’ as a four-letter word:

• Budgets give you control over your money–they help you establish intentional spending habits rather than mindless habits
• Budgets allow you to create and maintain sound financial habits (spending less than you earn, paying yourself first, etc.)
• Budgets help you to identify areas where you can make better choices (ie. blindly spending on daily coffee but not being able to afford a vacation)
• Budgets allow you to reach your goals
• Budgets make you your #1 financial priority
• Budgets don’t have to cramp your lifestyle–they are fluid and can fit anyone’s current situation!
• Budgets create lasting behavioral changes

Three keys to a successful budget:

For some, it boils down to a lack of understanding about how a budget works. For others, it’s a feeling of helplessness about their current situation. Whether you make $5K or $50K per month, you must have a budget to account for the ebb & flow of your money. Rather than a list of what’s coming in, going out, and what’s leftover, you need to think of budgeting as an activity, not an object.

Here are the only 3 steps you need to make a budget work for you:

1. Break your financial responsibilities into categories and assign $$ to each (mortgage, savings, etc)
2. Track all $$ spent (preferably as you spend it)
3. When a category is empty, STOP SPENDING!

While it’s surely easier said than done, try it out. Tweak the categories to fit your life and be realistic about your spending, priorities, and preferences. Then enjoy reaping the benefits of a balanced, successful budget!

 

How do you budget?