Myth: Budgets are like diets
Isn’t that the most ridiculous thing you have every heard? But, that’s how budgets get treated. Like something you resort to when your pants don’t fit. Let’s compare having a budget to being in good shape really. Have you ever seen a trim, fly gal who exercises regularly, and eats healthy? Sure you have. My sister is a great example. She loves how running makes her feel in body and spirit. So, she runs daily. She is fly and trim. You know what people say to her, “You don’t have to work out, your so thin!” From this vantage point it’s easy to see how amiss that advice is. She is thin because she works out. It’s exactly the same with budgets.
Budgets have gotten a bad rap. As a culture, they are down there with diets. However, suspend your judgments for a minute and imagine them as magical map to wealth. It is easier to see this magic if we eliminate the emotional element. Personal finances can be very emotional. Since business and personal finances are essentially the same, I’m going to ask you to imagine we are talking about a business.
Now, from this perspective, how successful do you think a business would be if it operated without a budget? If they didn’t know how much they spent or, more importantly, how much they could spend, and still produce a profit? It would like trying to drive blindfolded! If you can’t see how much you’re spending it’s almost impossible to know if you’re producing a profit. Your personal finances are essentially the same.
Don’t you require that, each month, you get a little ahead? That you have something to show for your work more that just surviving? The easiest way to do this, that gives you a high probability of your desired outcome, is to have a budget. A budget allows you to see how much you’re going to spend, before you spend it! This is essential. How can you possibly capture saving, consistently, if you don’t know how much your spending?
Do you know how much you spending? My guess would be no. That might sound pompous, but 99% of my client have a huge gap between what they think their spending and what they are actually spending. If your game download this expense sheet and fill it out. Then add your primary checking account to mint. (Worried about security? Check out this post.) It will show you the spending for your last three months. How do these two number compare? The average difference between my clients estimated numbers and actually number are $2,093! I know it sounds unbelievable, but it’s true. Do the exercise!. It will take 30 min tops, less than a Kardashian episode, but 1000’s times more rewarding. Do it now. What did you find? Need help deciphering the info, let me know. I will be your guide.
Thought this was valuable please share. It’s a damn crime we don’t talk about money.