Do You Hate Budgets?

Budgets also known as spending plans will help to change the game for your money.  Some people think spending plans are too restrictive and my thought is that you haven’t found one that fits yet. Oftentimes the budget sounds like you need to strip your lifestyle down to zero to make any progress, this may be true depending on your situation. However, life doesn’t have to stop because we are getting our money together.   In our society we have a lot of demands on our time and resources, depending on your stage you may have a family and children activities cost and add up very quickly. You may even be someone that travels a lot for work so your food expense is higher than the average because you are unable to cook.  The point here is that personal finance is unique to the individual and just like the old Apple commercials used to say, “there is a app budget for that.” Now let’s break down the different types of budgets. 

• Zero-based budgeting, is when all of your expenses and income balance out at zero. Meaning every dollar has a job and you are diligent with your spending.   The zero based budget can seem very rigid for some because of every dollar and cent being accounted for.  Using this option may give you a short-term reward, but if anything out of the ordinary happens you will be forced to update and change the budget lines. 
• Values Based Budgeting is a method of budgeting that prioritizes spending in line with your values and goals. This style of budgeting allows you to direct your money to priorities that support your values vs sending money to support old spending habits. 
• The idea behind the 50/30/20 budgeting rule is that it helps to ensure that you are able to cover your basic needs while also allowing for some flexibility in your spending and saving enough for your future financial goals. It suggests that you divide your after-tax income into three categories:

• 50% should go towards necessities such as housing, food, transportation, and healthcare.
• 30% should be allocated for discretionary spending, such as entertainment, dining out, and shopping.
• 20% should be saved or invested.
• Goal Based Budget is a budgeting method where you set specific financial goals, and then create a budget that helps you achieve those goals.  Here you will determine what is most important to you and build a budget to reach each goal.  Whether the goal be to pay off debt, save or invest for retirement, your money allocation will be primarily in this area once you fulfill your primary responsibilities. You will regularly check this method to maintain focus and motivation throughout the process. 
• Pay yourself first budgeting is a strategy where you prioritize saving a certain percentage of your income before paying bills or making other purchases. The idea is that by setting aside money for savings or investment first, you are less likely to spend it on other things. This style of budget allows you to fund your goals first prior to paying for other responsibilities. 

Now that we’ve discussed the different styles of budgets. We will also discuss the potential drawbacks for budgeting. 

• Time-Consuming - initially implementing a budget can seem like it may take a while to get it right.  Like with any other habit it will get easier with time. 
• It may seem Restrictive.  If you are used to running around without a budget, when you put systems in place it may seem restrictive. This is completely normal because you are paying closer attention to your money and spending on things that matter to you. 
• It can also be unrealistic. Budgeting in the beginning may be too aggressive.  For example, if you start with spending $500 per month on restaurants and when you implement a budget you allocate $100 per month.  This may feel very restrictive in the beginning because the cut may have been too drastic.  A gradual approach may suit your situation better.  Don’t give up, make adjustments and try again. 
• Unexpected expenses may arise.  With every client that I’ve worked with we’ve thought we had all the bases covered then BAM life happens.  This can cause stress in several areas but creating a separate emergency fund will make these life inconveniences easier to withstand. 

Have you ever been overwhelmed with money? Have you ever felt like your spending was good but you couldn’t figure out why there was a deficit every month?  I regularly help clients breakout of the cycle of spending and not reaching their goals. We accomplish this first by figuring out exactly what is going right, what is challenging and we work together to determine what goal is the most important.  Once we figure out the goals we work to create a plan that will expedite their ability to reach the goal. Are you tired of not getting the most out of your money?  Great! I want to help you! Click this link to schedule your free 15 minute QA session.