Budgeting May Be A Painful Exercise, But Failing To Budget Is Even More Painful.

Sometimes clients tell me they don’t envy what I do—the sitting behind a desk and calculating capital gains taxes, considering the many factors involved in choosing one retirement plan over another, diversifying and rebalancing portfolios as needed. It makes sense that my clients don’t envy what I do—that’s exactly why they hire me. And let’s be honest, sometimes sitting down and setting a budget and tallying up monthly income and expenses can seem tedious and boring. Maybe you avoid budgeting not only because it’s tiresome, but also because you’re afraid of what you might find in your monthly debit records.

 But what if you reframed the whole budgeting experience not as a tedious exercise, but as an opportunity to take control of your financial future? Instead of seeing this process as a necessary evil you could view it as the chance to achieve your short and long-term goals and to change your destiny. The process of sitting down and creating a cash-flow statement is actually pretty easy, but the execution of that in day-to-day life can be much more challenging. Success is built not in the grand achievements and milestones, but in the daily, constant practice of good habits. Budgeting is one of the key building blocks of financial success so it should be viewed as a pleasurable exercise. When you tell every dollar in your budget where to go you are in control. In this moment you not only work for the money you have, but the money you have also goes to work for you.

When it becomes challenging to budget, remember the consequences of your choices. If you fail to budget, the worst thing that could happen is that you run out of money before you run out of month, and your debtors could foreclose on you. The best thing that could happen if you execute your budgeting plan is that you could hit your goals and continue building the life you want to live. If you don’t take the time to work on your goals then soon you’ll pay for it in other ways.

Here are some lifehacks for budgeting that can help keep you on track in accomplishing your goals.

  • Don’t use a credit card as a buffer. Using your credit card as a way to offset monthly budget deficits is not a sustainable strategy. Eventually your debt will be too large to handle and you won’t be able to charge any more purchases. This is very dangerous territory to be wading into.
  • Do a monthly check-up on the first of every month to see how you can improve in growth areas from last month. Initially establishing your budget is so important, but you have to continue implementing and checking up on it to ensure that it’s working. Don’t underestimate the power of making little tweaks along the way. Adjusting expense categories and eliminating some purchases altogether can go a long way towards putting more money in your back pocket.
  • Align your expenditures with your priorities. When you look at how much you’re spending in each area you might be surprised by where the money is going. Keeping tabs on this regularly ensures that you’re spending money on the things that matter to you the most. For instance, a couple I advised once looked at their monthly spending and realized that they wanted to lessen the amounts they were spending on new clothes and food and increase the amount they were giving to their church.
  • Get on board with your spouse. Make this a fun activity by hanging a poster board in your room, sharing a google doc, or setting goals and awards for each other. Whatever you do, just get on the same page and be each other’s cheerleaders. I’ve found that with most of my clients generally one of the spouses in a relationship is more financially inclined. If that’s the dynamic in your relationship, then help the spouse who is less inclined by giving them information and keeping communication open regarding your mutual goals.
  • Remember your “why” in budgeting. This all goes back to your greater purposes in life. When you tie the otherwise tedious task of budgeting to your long-term goals and purposes in life it makes it an important, even fulfilling task.

When he's not reading WSJ, studying finance, or blogging Daniel can be found biking around Roanoke, exploring the outdoors with his DSLR, or attempting to bag and dispose of the ridiculous amount of leaves in his yard.

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