You Thought Going to the Gym is Hard, Try Budgeting

And you thought going to the gym was hard?! Try Budgeting.

Please don’t quit reading yet – this may be one of the most frequent topics I discuss with my clients especially at tax time. Add in the ever-increasing future costs of healthcare and nearly everyone (wealthy or building wealth) will care about a budget at some point.

Pennies

I read a great article recently* about how your life changes over time. Where living on a budget may once may have been necessary to survival…to the fast-forward version when you are making so much money budgeting is “no longer necessary”. Unfortunately, I often observe the long-term effects of no budget – or no communication regarding spending – and the results can be tragic and incredibly stressful at any age. Consider the following positive view that breaks down budgeting – for you, for your kids or someone you know.

  1. Budgeting s##ks.
  2. Remember the Key Balance: Worry about the BIG items (housing, transportation/cars) FIRST. Next, be keenly aware of and manage the important mid-size items. Last, you need not worry about the minor purchases as they matter very little in the big picture (Starbucks, Chipotle, etc.).
  3. The missing link in the budgeting discussion is MAKING MORE MONEY. Remember how important it is to improve your career prospects to increase your paycheck(s).
  4. [BIG ONE]Your spouse’s views about money make a HUGE difference. If you’re not on the same page as your spouse philosophically in terms of money, saving and spending it will be very difficult to get your financial house in order. Your life will also involve a whole lot of stress. TACKLE THIS ITEM EARLY.
  5. Treat savings like a monthly bill. Automate your finances, including monthly saving. Have money automatically pulled from one or both paychecks on a periodic basis so you know you will not be tempted to spend it in the first place. This is huge from a psychological standpoint to make saving less painful.
  6. Guilt-free spending helps. By automating your SAVING then you can spend what is left over without feeling guilty. Spend that money on stuff that makes you happy (knowing that you had to cut back on some things).
  7. Remember: the best time to save (and tackle this budgeting thing) is when you’re young. You have a lot of time to allow compound interest to work to your advantage. A qualified adviser can keep you on plan and less affected by emotions and the media. You can see results over the intermediate-term (as little as 3-4 years) which will be here before you know it!

You would be surprised at how a little persistence on these topics can make a real positive difference in your life and your relationships in a small amount of time. Your life does not “freeze” at today’s spending. There will be years when you spend more – for fun reasons (family vacations, lavish celebrations) AND reasons out of your control (health emergencies, family member in need) – and years you spend less. Budgets can be a guide to a more happy, free life.

The author’s bottom line: Having all the money in the world while still worrying is not wealth. Sometimes living a “wealthy life” is really about avoiding the stress most people feel about money.

*Ben Carlson, http://awealthofcommonsense.com/2018/02/now-then/

 

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