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A budget is the backbone of financial success. As a matter of fact, it's extremely difficult to be successful financially without developing a realistic budget and sticking to it. Developing a budget is the easy part. It's the "sticking to a budget" part that most people have trouble with.
I've had many people tell me that establishing their budget
was easy, but when it came to sticking to it for the long term, they simply lost interest in it very quickly. And lets face it, conforming to the constraints of a budget is no fun!
The day-to-day drudgery of managing your money isn't the most interesting aspect of your life. But the evidence is clear: Those who stick to a well planned budget on a long term basis live more comfortably than those who don't, and with less day-to-day worry.
In this article, I'll do my best to make the budget process a little more appealing to you. I don't have a secret process to reveal to you, but I do have an effective method that will demonstrate to you why a budget doesn't have to be boring.
I can do this with a single word: Goals
Having goals is a must if you truly wish to stick to a budget. When you think of goals, you probably look far into the future to your retirement. Therein lies the problem. When you're 20, it's difficult to imagine what you'll need to live on when you finally turn 65.
Accomplishing your goals shouldn't have to take an entire lifetime! But even when it does, you can set milestones along the way to break it up and enjoy a sense of accomplishment much earlier.
If you have difficulty staying on a budget, try establishing some short term goals. Let's start with an easy one: Try to save $100 without missing it.
Unless you simply have no income at all, this is an easy goal to reach. Don't spend any of your coins for any reason. If you buy something for a quarter, break a dollar. Then empty your pocket change into a jar every day.
This sounds like a very simple process (and it is) and you've most likely heard about saving change before. But if you're a skeptic like I was at one time, you probably think that this isn't going to lead to any real savings at all.
Let's get back to that $100 I mentioned earlier. How long do you think it would take you to save $100 in change. Six months? A year?
In reality, the average person can easily save $100 in less than three months. In some cases, even sooner. That's not a very long time at all to accomplish an important goal.
Now let's talk about setting milestones using the same method. Roll your change once each month to determine how close you are to reaching your goal. Record how much you saved that month on a slip of paper. Put the paper and your rolled change back in the jar. Do this each month until you've reached your $100 goal.
Now that you have $100, what should you do with it? Well, you could stash it in a savings account and earn a little interest, but the balance wouldn't be worth much more than $100 even after an entire year.
My suggestion would be to use it to pay down the balance on one of your credit cards. That way your real earnings on that $100 will be much greater than the small amount of interest that you would make in the savings account.
It may appear that I have strayed from the topic of this article by talking about saving your change. But actually, a budget is just a system for reaching your goals. You can best do this by working backwards. First, decide what it is you want to do. Then make all of your money decisions based on that end.
Creating and sticking to a budget is going to take organization and discipline. Sticking to your budget will be much easier if you're constantly working toward something you really want (like a secure retirement). You can stick to your budget if you're always looking ahead!
Terry Rigg is the author of "Living Within Your Means - The Easy Way".
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