Budget Boot Camp :: Back To Basics

It is always nice to know that you have money in your pocket during times of crisis and emergencies.

Occasional recreational activities and buying luxury items that you want to purchase can add spice to your life.

How can you possibly have the extra money yet also have a comfortable everyday living? This is what the magic of budgeting can do for you.

Simply put, budgeting is the act of being disciplined and organized in handling your money. Proper personal budgeting is the key to financial freedom. Budgeting does not only have to do with numbers either.

More importantly, it deals with the mental and emotional side of money handling. Financial professionals would love to say that personal budgeting is basically 80% behavior and 20% math. One’s behavior towards money would dictate how he or she uses and saves money.

If you are an impulsive buyer your idea of money is something that you can easily spend because of the fact that you can also easily earn it. With such thinking, you would lose too much money before you even know it.

Budgeting should be done in all honesty, as you are only hurting yourself if you fudge the numbers. You should know how much money you are earning from your regular work as well as any other means of income. Record the numbers that reflect all of your expenses and label the things that you spent the money on. By doing this, you will see how much money is coming out of your pocket everyday.

In evaluating your budget, you should be able to pinpoint the areas where you are spending too much money. It may be the regular nights out at the nearby club or your compulsive need to shop online. As soon as you see your everyday expenses before your very eyes, you will realize if you are living beyond your means and what you can do to cut down on your expenses.

To help you get started with personal budgeting, here are the basic things that you need to do.

  • Keep a diary of the things that you purchase, no matter how small. This way, you can monitor your everyday expenditures. Jot down ALL the things that come out of your pocket and also the things that you pay with a credit card.
  • Shop with a list. When you decide to head out to the mall or grocery store, it is always a good idea to list down all of the things that you need to buy. Once at the store, stick to your list and only buy the things that you need. Here are a few more tips on how to curb impulse buying.
  • Set a limit on the amount of money you will spend. For example, if you are to spend a night at the bar with your friends, you can set a certain budget and do not, at all cost, go over your set limit. This is where you will need discipline to avoid overspending. There is nothing wrong with going out and spending money as long as you establish limits.
  • Keep an open mind whenever you are plan to purchase something. Ask yourself: Is this purchase an investment? Is it a necessity? Will I gain something out of this purchase? If the answer to these questions is a yes, then you have yourself a good buy. If you answer no, you might want to hold off on making the purchase.

More than anything, personal budgeting is personal discipline. Keep in mind that you need to budget your money all of the time. With a “budget” mentality you will be able to save up big and live your life in utmost comfort.

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2 Responses

  1. Alan says:

    Great tips, especially the last one. Asking yourself if a purchase is necessary or an investment can prevent you from making an impulse buy. I also try to think of things in terms of the time I’d have to work to pay for it…if I make 10/hr and an item is 10 dollars, that means I’m trading an hour of my life for the item. A lot of times it keeps me from making an impulse purchase.

    • mnc says:

      Thanks for the comment! You’re using a great strategy to examine the cost of an item based on how much you value your time.

      That is the strategy that I used to justify hiring someone to care for my lawn. It took me an average of 1-2 hours per week to mow, edge, etc. and the cost that I was able to hire someone was much less than the value that I use for an hour of my time.

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