Budgeting or a Root Canal–Which One is Worse?
As an adult, I’ve noticed that budgeting is one of those things that comes up in conversations the same way that going to the dentist does. Yeah, you know you haven’t been in a while and that you should really check in to make sure everything is going okay, but the second you do, you’re hit with the anxiety that recognizing a problem makes it real.
As humans, our first instinct isn’t to save. We make money so we can live the lifestyle we want and feel we deserve, and sometimes that means ignoring the possible pitfalls of the future. Are you saving for retirement? Do you ever want to buy a home? Are you planning on having children one day? If you answered yes to any of these questions, you should at least be thinking about budgeting in the back of your mind. And while I know that it’s daunting, getting started doesn’t have to feel like going in for a root canal! Below I have three simple steps to taking stock of your finances, and a few ways to actually stick to the budget you place for yourself!
Getting Your Finances in Order
So here’s the hard part. You have to take a long hard look at where you’re spending your money each month.
I know this can be embarrassing or terrifying and just this step can totally turn people off from budgeting in the first place, but it’s important to remember that you’re only human! As humans we all have a vice, maybe it’s a $5 latte every day or a few $10 cocktails every Friday night. No matter what it is, the first thing you should know is that I WILL NOT ask you to stop doing that thing that you enjoy so much. Budgeting isn’t about punishing yourself or abstaining, it’s about moderation. So without further ado, here are my three steps to stating your budget journey:
1. Print out your credit card, debit card, and checking account statements for the last three months.
This is a hard step because it requires you to take a good, hard look at what you’ve been spending your hard earned cash on, down to the cent. While this may be a painful trip down memory lane, it’s so important to see on paper just how much you’re spending every single day so you can know where you need to make adjustments.
2. Take all of your spending info and sort it into categories, then assign each category its total dollar amount.
Some common categories I use are rent, bills, groceries, dinners or drinks out, entertainment, and shopping for reference. Once you break your spending into these categories you can get a sense of not only where you’re spending the most, but how important each category is to you. Rent and bills will always be around the same, barring unforeseen expenses, so those are the easiest part of your budget. But it’s the other categories that can be really telling about how and why you spend your money. Do you “treat yourself” to a shopping spree anytime something good or bad happens? Do you go out to dinner or get take-out almost every night. A lot of the time we make these spending decisions out of a place of emotion or laziness, and luckily they have fairly simple solutions, which I’ll discuss later on. What’s important about this step is getting real about where you spend the most, and more importantly where you can reasonably cut back.
3. Be realistic when writing out your budget.
If you’re currently spending $200 a month on coffee you can’t give yourself $50 a month and not expect to go over your limit. That’s a one-way trip to disappointment and self-loathing. Instead, start by trying to get it down to $150. It will be a much more realistic goal and means that you are more likely to keep your savings promises to yourself.
How To Stick To Your Budget Long Term
For those of us who love instant-gratification, writing your budget already feels like a huge accomplishment, so who cares if you actually stick with it? News flash, if you don’t stick to your budget you don’t actually save any extra money for your long-term goals! Here are three ways that you can fight the urge to cheat on your budgetary promises:
1. Name your savings accounts after the actual thing you’re saving for
Whether it’s a new car, a house, or a super luxurious vacation we’re all saving our money for a purpose! So why not remind yourself of that thing every step of the way? Online banking platforms will often let you give nicknames to your accounts, so name them after the exact things that the money will be going towards! That way, every time you’re tempted to transfer money out you’ll have to face the fact that you’re just robbing yourself of achieving your goals faster and you’ll be far less likely to dip into your savings.
2. Accept that you’re human, but don’t give up
So you didn’t stick to your budget in every single category, so what? Even financial experts don’t follow their own advice down to the letter. We’re only human, and we can’t see the future so every month it stands to reason that you’ll be a little over or a little under in at least one category, and that’s fine! What you don’t want to do is see that you didn’t meet your goals and give up on budgeting completely. Maybe you wanted to save $200 this month, but you were only able to achieve $130, don’t just fall back on your old spending habits! Just accept that you’re human and you’ll never be 100% perfect at anything you do. You still save $130 and that’s still a win because it’s $130 you would have spent otherwise!
3. Nothing is quite as effective as a reward system
When I started budgeting, one of the first things I had to kick to the curb was my coffee shop addiction. I was picking up $5 or $6 coffee drinks a few times a week, sometimes even every single day, and when I took a good hard look at my credit card statements I realized I definitely had a problem. Now, I’m an all or nothing type of person who prides herself on having a lot of will-power and I quit cold-turkey. I became a home-brewed coffee convert, and I honestly didn’t miss my daily lattes all that much. As long as I had my caffeine in one way or another, I was happy. But when I decided to quit my coffee shop ways, I made a deal with myself that made the switch a whole lot more enticing. I promised myself that I would still get an iced coffee or latte one day a month because abstaining from something you love just for the sake of saving can get a little depressing over time. You have to give yourself little treats here and there to ensure you don’t end up going on a crazy bender one day. Money, just like the best things in life, is all about moderation. You don’t have to starve to lose weight, you just have to eat less of the fatty delicious things and more of the things that are good for you, and working on your financial health works the same way!