My best clients don’t stick to a budget!
You may wonder how they can be my best clients if they don’t stick to a budget. Here’s the secret: They can’t avoid making a budget because it is a critical step in the financial planning process. But once they’ve done it one good time, they don’t necessarily need to revisit (or stick to) it every month. That’s the difference.
Some months will be better than others, and most people with a decent income can typically cover their bills, save a little, invest some, and have a little fun here and there. That’s normally how life goes.
But millions of people still can’t do what I just described. They aren’t paying their bills on time, they aren’t saving and investing, and they may be having too much fun, living it up, and spending money they don’t have.
Budgeting isn’t fun and exciting for those people and will never be. It will always make them feel restricted in some way. If you’re in this camp, here’s what I propose: Try to find a budgeting strategy that you can commit to doing. Once you commit, give it a few months until you’ve built this habit of spending awareness.
As soon as you hear the word budget, it can drastically change your mood. That’s because when you say the B-word, it makes you think about spending cuts you have to make in your life. So, if you’re in this camp (that hates budgeting), here are a few strategies that might assist you with your money management skills.
The Highlighter challenge [ This has by far produced the best results with my clients. ]
Pull up your bank account (or credit card) statements for the previous (3) months online. Print them out. Grab a highlighter and mark all the expenses that were not essential to living. In other words, you will be highlighting the “wants” in your life. Typically, when I have clients do this, it’s easy to find an extra $75-$100 spent on something they “wanted” to do. That extra money could be applied to something essential in your life or might go towards saving, investing, or paying down debt.
50/20/30 plan
This simplified framework will help you prioritize the various expenses in your life. It’s a “quick and dirty” way to budget. It doesn’t necessarily cover everything, but if you need an easy way to start budgeting, this might do the trick. Click here to check out my version of the 50/20/30.
Bank/Credit Union
Many financial institutions offer an online money management tool. Have you given it a try? This is another easy option since they already track your activity each month.
There are tons of other apps that can assist you with improving your money management skills. I don’t endorse anyone in particular because they can all help you if you commit to using them. Plus, I’m not big on giving out free marketing to apps in which I have no equity stake.
And if using an app isn’t for you, a good old Excel spreadsheet (there are hundreds out there) will never let you down.
You may never become a fan of budgeting, but it’s crucial if you want to be a better steward of your money. And this last gem might be what the entire world needs to hear – – find the budgeting strategy that works for you and stick to it the best you can.
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