Does it seem like your money doesn’t stretch as far as it should?
Feeling trapped by your financial obligations – trudging day after day to a job you hate because you feel like you can’t afford to leave?
Or confused about how you’re supposed to be paying for groceries and gas, electricity and dance lessons, soccer leagues and annual vacations, all while also saving for retirement, college funds and medical expenses?
Oh and a new car every five years? And maybe even a wedding or two down the road?
Well, you’re not alone.
I’ve been exactly where you are (except for the wedding thing…I have three sons, so we dodged a bullet on that one). I know how frustrating, and depressing, and even baffling money management can be. There are days when it feels like it will never get better. Like you’ll just have to make the best of your less-than-ideal life and buy a bunch of lottery tickets.
But there’s good news. And if you are reading this article, you probably already know what it is. It’s not new. It’s not flashy. But it can seriously change your life.
It’s a budget. And love them or hate them, they are the key to getting control of your money and your financial future.
I’ve done a lot of research about budgeting over the past several years. And I’ve learned that people tend to fall into one of four categories when it comes to managing their money. Knowing which group you’re in can help you figure out where things may be going wrong and how to get back on track with your budget.
The Blissfully Ignorant
If you’re in this group, you’ve heard of a budget, but never given it any real thought. You make money. You spend money. You borrow money to spend more money. You have lots of debt because credit cards are a major part of your life. More likely than not, you don’t know (and may not care) how much money is in your bank account right now. You also probably have no idea how much debt you have accumulated. Sometimes it’s easier just not to think about it, right?
Maybe that’s how your parents lived, so you figure this is how everyone does it. Or maybe no one ever really talked to you about finances, so you feel a little lost when it comes to money. Most of your thoughts about money center around wishing there was more of it.
I call you blissfully ignorant, not because you’re happy (most of you are completely stressed out, but you’re not quite sure why), but because you haven’t realized the full horror of what your money management decisions have done to your future. You’re like a rabbit sweetly munching on carrots, unaware of the trap you’ve sprung upon yourself.
I feel for you. I’ve been in your shoes, and it isn’t fun. There’s an unidentifiable layer of stress bubbling just below the surface of your life. You know you can’t keep going like this forever, but you’re terrified of what it will mean if you examine your finances too closely. Like there’s an avalanche just above your head, and if you can just avoid looking at it, you’ll be safe.
But I’ve got news for you. The avalanche is coming whether you acknowledge it or not. You can’t outrun your past choices, but you can decide to make a change and start shoveling away at that pile of snow today.
I want to help you avoid being buried under your debt and stress. Like I said, I’ve been where you are, and I made it out. If I can do it, you can too.
There are lots of articles and resources here to help you every step of the way. And the good news is, if you’ve read this far, it means you’re already on the right path.
You’ve just made a life-changing discovery and are on your way to a more peaceful, prosperous, unfettered way of life. Take advantage of this moment and skip right ahead to this post about how to make a budget that works for you. Come on, you know you want to…no time like the present, right?
This is probably where many of you find yourselves. A lucky few of you are actually in this category because of your prosperity. You’ve done well in your careers and have enough money to be comfortable without any planning. But your money isn’t really working for you as hard as it could be. And all your life plans (vacation homes, early retirement, dream vacations, etc.) may be harder to achieve than you realize if you stay in this group forever.
The rest of you realize that what you’ve been doing with your money isn’t working, but you haven’t taken the plunge to make a real change in your finances yet. You know that budgeting is a good idea, and have probably even made some attempt to start a budget or “figure out” your spending. But the desire to get a handle on things fizzles out quickly and you find yourself right back where you started. It gets a little hard or confusing or boring and you slip back into old habits.
For this group, budgeting is sort of like going to the dentist. You know you should. You know sooner is better than later. You know you’ll be better off in the long run if you just get it done. But it takes time. It’s inconvenient. It might be painful. You’ll think about it next month.
But I’m not going to let you get away with that. I’m going to be the friend that says, “What are you waiting for?”
This is your moment. This is your call to action. It’s time to stop stalling and get your money situation (and possibly your teeth) sorted out.
If you’re in this group, you’ve decided to make a budget. In fact, you have made a budget. But it isn’t working for you. Every month is an annoying reminder that you overspent in this category or didn’t save enough for that category. Or you’re spending all your time counting every penny and griping at anyone in your family who didn’t follow the rules you so carefully laid out.
You’re frustrated. You feel suffocated by this budgeting stuff and you’re ready to throw in the towel.
Don’t do it! I used to feel the exact same way, until I realized that I was trying to make a budget that didn’t fit my life or my personality. I had to cut myself a little slack. And find a system that worked for me.
So relax. If you overspend one month, it’s not a big deal. This is your money and your budget. No one is going to fire you from your budget if you get it wrong. You get to make all the decisions. So make adjustments as you go. Set clear goals and do the best you can to reach them.
Getting over this hump is sometimes the hardest part. Because it gets a little tedious. It can start to feel like you’re never “getting it right.”
But budgeting isn’t about perfectionism or winning. It’s about taking control of your money instead of letting it control you. And I want to let you in on a little secret…you are already doing this!
You’ve worked hard to set up a budget. You’ve probably paid off some (if not all) of your debt. You’re saving. You are in control.
The trick is not to go so far the other way that you end up enslaved to your money in a different way, letting your budget boss you around instead of using it as a tool to achieve your dreams.
If you want to read more about my personal budgeting strategy, look here.
The Rock Stars
If you’re in this group, congratulations! You’ve committed to using your money with wisdom and self-control.
You’ve got a budget and you’re sticking to it….changing it as needed to fit new dreams, circumstances, and setbacks.
You live within your means. You know that nothing you could buy would match the peace of knowing your finances are under control.
You don’t go into debt and are working to pay off any existing obligations (or you’re already DEBT FREE!).
You feel a sense of freedom, knowing that your financial dreams are not only possible, but very likely to come true. Not because you hit the jackpot in Vegas or inherited a fortune from old Aunt Millie.
But because you work hard.
You make wise decisions.
And you plan for the future.
This is the group I want to live in. Sometimes I make it here…other times I slip into another category, but this is always my goal.
What about you? Where are you today? Where do you want to be?