Budgeting is probably one of those dirty words that no one likes to hear. It’s the sort of word that most people put in the too hard, too boring basket along sorting out your Superannuation. Many people dont enjoy budgeting and infact think of budgeting about as fun as cleaning the toilet!
Why budgeting should be exciting!
Truth be told budgeting is not as unexciting as most people think it is. Look at it this way if someone came up too you and handed you $20 would you be excited? I would! Well what if it was $40 or $60? What would you spend that money on and how happy would that make you? What if you were given that amount every single week? How would you spend it and would it make you happy? I doubt you would say no to this!
No one is going to give you money for nothing, but you could be giving away lots of money every week without even realising it when you do budgeting properl, you could put that money back into your wallet so you can spend on more important things.
Why does budgeting never work?
Well its just that a lot of people take a really bad approach and most of the time this involves arbitrarily allocating cutting their income into segments without any understanding of how they spent their money in the past. This is a very unrealistic way to do budgeting.
Budgeting is not about the budget!
The best way to do budgeting is to not draw up a budget at all. Bit of a contradiction right? Think of it this way insead of drawing up lines through your income saying how you will spend the money, draw up a map of how you have spent your money in the past. Put it into an Excell spreadsheet and spend a long time just understanding it. That’s all budgeting is understanding how you have spent money in the past so you can spend it better in the future. Only once you understand how you are budgeting now can you start budgeting for the future.
Prioritize the Value
So once you have stop drawing up arbitrary budgets and start properly budgeting, you will then be in a position to look at where you spend your money from a bird’s eye view. Then ask yourself wether you get value out of the money you spend on things and wether you could better use that money for something else.
Get a Better Deal
With all those expenses you now understand then see if you can get a better deal. Would you be better off on a different phone plan or perhaps prepaid ? Or are you finding your spending a fortune on electricity for lights left on in rooms your not even in or computers your not even using?
Ill give you an example, I recently crunched some numbers and discovered that I was spending twice as much on a phone plan than I would on prepaid.
See!! budgeting is a process of understanding how you spend your money rather than a map of how you think you should spend it.