5 Steps to a Strong Budget

This is not a topic for the faint of heart and may be difficult for some of you to swallow. Coming from a family of 6 kids, all raised the same, there is much that can be delineated. First of all, you can raise 6 kids the exact same way and everyone of them will turn out slightly different. However different, we are all predisposed to familiarity. Mom bless her soul did the majority of the parenting on her own, and slowly we became the products of the surroundings in which we understood.

Because we were raised by such a strong and independent woman, the girls in the family quickly amounted to the same. We quickly found ourselves carrying a strong work ethic, highly motivated and successful, we understood quickly how to earn, and found that earning status important, far superior to love and often health. My brothers were also raised the same but became accustomed to taking the backseat to strong women.

Along the way, she did forget to teach us some valuable lessons regarding money. We all understood how to make it, but had much trouble holding on to it. I was 29 years old before I even developed a budget, and it was only due to the mentoring I received from someone else. That person asked me, how did you graduate from college and not understand basic financial budgeting? I was astounded, here I was managing budgets for million-dollar hospital revenue and I didn’t even have a personal budget.

What happens when you are not aware of what you are spending? You usually spend more than you make and rarely have anything to show for it. A friend recommended a book by Dave Ramsey which changed my life. If you have never read the total money makeover, I suggest you get it today. I think I purchased my copy from Amazon. I was smart enough to understand this message quickly, and I hope you do the same. Here are some tips to budgeting.

1. Track Everything coming in and going out. This may mean that you have to keep a small money journal to keep track of that coffee you purchase at the coffee bar or that pack of gum you buy at the convenience store. This is a quick study of your habits surrounding earning and spending.
2. Live on only 70% of your earnings, use the other 30% for the following: Break this down into 3 categories at 10% each. 10% for savings, 10% investing in a way to make money (Get creative – build a website, make a craft store, play the stock market, etc.) and 10% to the less fortunate (Get involved in a charity that you are passionate about). You can achieve this with SMART goal setting. You may not be able to start at 30%, but with careful planning you can get there quickly.
3. Make a budget spreadsheet and commit to it. Create a complete budget and allocate every penny to go somewhere, savings play, etc. I like to use Microsoft Excel because with a quick formula, it will do the math for me. Stick to your budget, this will be tough at first but you once you see progress in your savings account, your off to building a new business or you are carrying that great feeling of gratitude for helping others in need, you will have your why.
4. Don’t forget to budget in for fun, vacations and holidays. If you don’t create a budget for these, they will force you to dip into your savings on a regular basis, making it difficult to build a savings.
5. Create a little reward system. Maybe for every thousand dollars that you save, you reward your self with that new $100 purchase, something that you really want. Rewards entice us to meet the challenge.