Posted on Saturday, January 22, 2011
A WRITTEN BUDGET IS A MUST HAVE. If you're serious about saving, invsetment or making ends meet there's no way around it.
Before you can save money you have to know what you’re spending it on. If you're reading this, make a promise to yourself to do this today – it’s the number one thing folks procrastinate with. But once you do it, it feels awesome and its totally empowering.
List the categoris of things you spend money on (if you're have trouble doing this send me an email by clicking the "ask Shari a question" tab on the home page of this website and I'll send you a one size fits all list). Then do the best you can to add up what you spend each month on each line item in the list. Take 10% (if you’re further out of budget you may need to cut more) off of what you allow yourself for each category, but allow yourself a line for something that will make a reasonable reward when you’ve succeeded at making ends meet for the next 6 months. In the past we’d be telling folks to budget in for savings. And those who can afford to do that definitely should. But for a lot of people at the moment, its more about surviving without going deeper into debt. Viola, you have a budget!
Next, write out 3 ways you’re going to accomplish that. Don’t think ‘sacrifice,’ think ‘substitute.’ For example, buy store brands instead of name brands groceries. Substitute free or low cost entertainment alternatives. The average American is spending about 15% of their income on food, almost half of that in restaurants! Choose restaurants you have coupons for or where the meals are big enough to make a second meal at home from left overs. Take your kids to the library instead of book store. Try a few lectures or less costly pay-per-view at home with friends instead of the movie theatre and $10 sodas. Going to a local high school show may not be a glamerous, but if can be just as much fun as higher priced commercial performances, Stay away from shopping as a recreational activity, try parks and many museums instead…many are free! This is important.
Tape your budget to the fridge, your bathroom mirror or someplace where it will be front and center, top of mind, every day until you earn your reward. Often times folks I’ve helped find they’re so much happier living within a balanced budget they don’t even want to spend the money on the reward anymore!
Remember, your budget will always be a work in progress. Revise it every six months as you find new ideas.