Last year I recorded a show about the 7 Common Denominators of the Wealthy.
It was then I realized there were many commonalities related to having – and operating on – a household budget.
With so many wealthy habits tied to being on a budget, why is it that most people don’t do one? It is because budgets makes us feel inadequate.
It certainly has made me feel inadequate. Tell me if you’ve felt the same way before too.
Budgeting makes me feel inadequate
Think back to the last time you created a budget. How did that make you feel?
I’ll tell you how it made me feel: Inadequate.
- We wanted to buy my daughter a computer for Christmas
- My wife wants to upgrade the stereo in her 8 year old SUV
- We need to replace the windows in our house (it was crazy-cold last winter!)
All of these dreams go into our budget to see what can be done. Guess what? We can’t do everything we want.
Even with two breadwinners in our household, we can’t do it all. I like the way Paula Pant puts it: “You can afford anything, you just can’t afford everything.”
I feel inadequate and don’t like what our budget is telling me. Our budget is telling me “No” when I want it to tell me “Sure, go right ahead Champ!”
Budgeting makes me feel controlled – and I am
I am 100 percent positive that I would be blowing tons of cash if we didn’t budget. We would be visiting Target unnecessarily, our house would be full of silly plastic stuff, and I’d be receiving more than my fair share of drop-shipments from Amazon.com.
However, budgeting allows us to pay the mortgage, buy groceries, and heat the house without trapping ourselves in credit card debt.
We create our household budget before the month begins so we can decide where it should go. Once money is allocated for necessities (food, shelter, transportation and utilities) the rest is ours to do with as we please. But there is only so much we can spend on entertainment without neglecting the need to pay for our cell phones and such.
By having a visual representation of our “spending power” we are letting ourselves be controlled. But guess who put those restrictions on us? We did. It is our budget that is controlling us after we created it.
Budgeting is necessary to make money last longer
Even though I feel controlled and inadequate by our spending plan, we do realize the importance of doing a budget every month. It forces us to face reality, make smarter purchasing decisions, and get what we want when it makes sense to do so.
I look back at our purchases from 2014 and think we spend way too much on food and our summer vacation. But guess what? It’s OK. It’s our budget!
We still reach many of our goals like paying cash for vacations, saving for retirement, and staying out of debt.
Also, the money we make goes farther because it’s being put where our values are. It is for this reason alone I can look past the inadequacy that my budget makes me feel.
Budgeting has helped us to double our net worth – and you can too
Last year I shared How We Doubled Our Net Worth. We didn’t inherit money or win a lottery, we just obeyed some common sense principles that anyone can follow.
It was our budget that helped keep our spending in check. It was our spending plan that pointed dollars to our retirement plans. It was purposeful spending that allowed us to spend money on the things we wanted and stop spending foolishly on things we didn’t.
Do you want your money to go farther? Would you like to double your net worth in eight years – or at least get your life back from the enemy (debt)?
The first step is to get on a budget. This gives you the power to tackle the second: Get rid of debt and soul-sucking interest payments!
Start your own budget today
Not sure where to start?
Here are five budgets that work – that is, if you work the budget:
- Pencil and Paper: Simply list your bills and debt payments on one side and your income on the other. See how far you can get before you run out of money, then start working on cutting expenses and increasing income to get further down your list.
- Enemy Of Debt budget spreadsheet: Of course there’s a free EOD budget. Why haven’t you tried it yet? Just click here
- The Absolute Simplest Budget That Works: This is my video course on creating a budget that can be used over-and-over. It fosters communication between spouses, tricks you into revealing your true priorities in life, and allows you to make mid-month adjustments to make the money go farther. My fellow Team EOD members have allowed me to offer a special deal just for you, because you’re the BOMB!
- Mint.com: Many of my friends use Mint as their budget. It does some magic by importing many of your financial accounts into a free online resource. Check out their webpage for free tutorials on how to use Mint.
- YNAB (You Need A Budget): Oh my gosh! This is the budget MY WIFE USES, so you KNOW I’m on board! Download and use YNAB on all your computers and add transactions while standing at the cash register or gas pump by using the free Android and iPhone app. Try YNAB free for 34 days and get 10% off by using this link. Note: This is an affiliate link and I will receive a small commission if you use it. But if you don’t use it you won’t get the discount – so it’s a win-win.
If you already have a budgeting process or program that works for you then please share it in the comments.
The bottom line: Budgeting should give you power and wealth
Budgeting is a tool that allows us to be purposeful with our spending and achieve our goals. Businesses budget, why shouldn’t we?
Track your spending and commit to sticking to your budget for 90 days. I can guarantee you will feel like you got a raise and you won’t feel so financially inadequate.