Each month make your money plan (budget) ahead of time.
Write it out on paper or use a budgeting app/website. Give every dollar a place to go. Create categories, buckets, envelopes, what ever you chose to call them, but make them and divide the dollars up into each accordingly. I personally like to start with my reoccurring expenses, utilities, Internet, TV streaming services, etc.
If you are new to doing a budget or want a quick refresher, read What is a budget? Why do I need a Budget? HERE
Evaluate
What am I learning about my spending and budget?
Once you have a month budgeted out you can then use that as a template for the next month. You can make adjustments, for example, if utilities fluctuate you can adjust the category.
How did you do on your groceries category? Were you over and reducing the amount in another category and moving it to the groceries? Take that information and increase the grocery category for the next month. Do those same steps for each category, increasing some and reducing others, but still telling every dollar where to go without going over the expected income.
Not perfectionism
Can my budget categories change through out the week or month?
The budget doesn’t have to be perfect; it is more important to plan ahead and make small adjustments as the month goes on instead of leaving things to change and winging it. Leaving it to chance leaves you with more opportunities to over spend and run out of money before the end of the month or when the next pay check comes in.
When you plan or do your budget ahead of time you use your prefrontal cortex, the front part of your brain, your planning brain. When you don’t plan and spend on impulse, you are using your primal brain or childlike brain, that wants instant gratification without thinking about the impact or big picture. In this case having enough money for expenses, food, housing, emergency fund, etc.
Getting Out of Debt Requires a Plan
What are the benefits of planning ahead, telling my money where to go?
If you want to get out of debt and have spending money each month, you need to plan ahead. If you want to have an emergency fund, you need to plan ahead. If you want to retire, you need to plan ahead.
Make it a habit to plan your budget ahead of time. Just like you do other things daily, like eating, brushing your teeth, etc., all things you do daily, make checking in with your budget a daily habit. Checking in and keeping tabs on where you are in your spending for each category will help you stay on track and keep you from overspending.
When you have the budget laid out, then when it comes time to spend the money, you already have a plan. If you go to the store and see that shinny object that you want, you check in with yourself and your budget, did you build in money in your budget for these impulse or extra items?
Then you can decide to make the purchase or not. Instead of buying it on impulse and then reviewing the budget later in the week or month and realize you don’t have money for necessities.
Feeling Uncomfortable
This doesn’t feel comfortable, what can I do?
It may feel uncomfortable to tell your money where to go, at first. To see that you don’t have a lot if any money left for all the fun things you want to do or buy. This is not a problem; nothing has gone wrong. In order to reach your goal of getting out of debt and living within your means, means that you have to be willing to feel uncomfortable at times.
There may be some immediate resistance at first to planning out your money and telling it where to go and not spending money on all the things. Yes, it is uncomfortable, but it isn’t a problem. When you allow your emotions and check in with yourself and really focus on your WHY you can shake it off and decide from calm place how you want to move forward.
You can also use this as a tool to know for the next week or months budget you we plan your money and maybe you plan money to purchase that item that you really wanted. You wait and buy it when you have the cash to do so. You may even find that you don’t really want it anymore and are grateful you slowed yourself down and didn’t buy it right then. WIN-WIN
It Takes Practice
Will planning out my budget ever get easier?
Just like learning a new skill, it takes time and practice. The more you practice and create your budget each week or month, the easier it will get. The more you see how telling your money where to go instead of wondering where it went, gets more comfortable and more satisfying. You will have resistance at first, but that isn’t a problem. Make your budget realistic. Plan out your money realistically, what things are necessities and debts that must be repaid and decide realistically what spending money you have to spend on those impulse purchases or extra activities.
Something else that is helpful to do for those extra items or activities, whatever you call the category, make sure these funds are cash. When you have to let go of your cash there is so much more emotional attachment and you are more apt to really check in with being willing to spend the money or not, oppose to using your debit card.
Creating a Habit
As continue to plan your budget ahead of time, you get better and better at knowing what money needs to go where in each category, you also get better about deciding what money you have for extra spending and entertainment.
Overtime this becomes easier and easier to do and becomes natural to you, just like other daily tasks.
I Am Here to Help!
Are you ready to get out of debt? Do you want to save money for emergencies? Do you want to have money so you can retire?
I am here to help! Schedule your free consultation call HERE and we will talk about where you are now and what your financial goals are and how it is TRULY possible for you to get there!