I don’t know about you, but every time I hear trips and tricks about saving money, the root of it all starts with budgeting. And it sounds simple enough to believe it. Make a list of all my monthly expenses and stick to those costs alone. The idea is that if we can spend less than our take home pay, we can save for a rainy day or that dream home fund. But, what these experts fail to share is that budgeting isn’t some secret ingredient the rest of us didn’t know about. Budgeting takes practice.
And a lot of practice. If you get budgeting down on your first time out, we’re donating your brain to science. Sorry, you don’t have a choice in the matter. I need to know how your mind works.
But if you’re like me and perhaps the rest of us, creating the list of expenses is the easy part. Sticking to it is the challenge. And something as trivial as dinner with friends can throw it all off kilter. Which isn’t fair, but real.
So, then, if budgeting is harder than it sounds because of surprise expenses, how can we be successful at it? Especially if we’re generating a second or third income stream?
Practice. Practice sticking to only the expenses you have to pay. Nothing more. If you’re the social butterfly but still want to budget, one of your expenses line items should either be miscellaneous or entertainment. That way you can include dinners out with friends and going to the movies as part of your budget. Ideally, you want to reduce how often you go out and spend money. If wasn’t made clear earlier, the whole point of budgeting is to save money. And spending money is the direct antithesis of saving money.
But back to the practicing of budgeting. The part we may need real help on: takes time and commitment. Chances are, we’re going to splurge on occasion. Or have an unexpected but important cost come up. It’s called life and she’s not always nice. So start practicing with weekly budgets. See if you can go one or two weeks without calling an Uber and Postmating lunch. Pay off a credit card to reduce an expense.
Want to make it exciting? The money you don’t spend, open up an high yield interest account, put the money you would normally have spent on frivolous things and save it for the end of the year. You can either treat yourself to something posh and outlandish or invest it in yourself or your future. Either way, you’ll have the money and the options to do so.