Budgeting: the best forgotten financial tool

Talking to kids about a budget is like asking them to communicate to each other without using the internet, they are going to stare at you in stupor. Same can be said about some parents! The truth is that budgeting is the most important forgotten financial tool to get ahead financially. Budgeting gives purpose to how and when you spend your money. Simple concept, but so foreign to most that it is put aside like an old land line phone. My wife and I have had conversations with peers and parents about budgeting and there are 2 excuses that always seem to come up on those “boring budgeting” conversations.

First, there is the “I don’t make enough to budget” excuse. As crazy as this may sound to people, there are people out there that still believe that you must make X amount of money to budget. Absolutely crazy! The truth is that everyone can (and should) budget their money. As little as a few hundred dollars a month (like most teenagers make on entry-level jobs) to six figure incomes, every dollar that you make should be tracked and used properly.

Second, there is the “well, I keep track of all my money in my head” excuse. This excuse on an age of technology is just simple ridiculous. There are several online budgeting tools that takes the guessing work out of budgeting and that simplifies how you can control your money. Most banks today offer tools that one can take advantage of, by just downloading a free app onto your mobile phone. There are several budgeting tools you can use for free. Dave Ramsey, for example, offers a free online budgeting tool that can also be printed if you prefer the old “paper and pencil” method like my wife. To go to Dave’s budgeting tool, click here.

If all this is still too confusing, here are some pointers that you can use when considering going back to the basics of budgeting.

First, start by convincing yourself you need to have a budget. No matter how little you make and even if you have an irregular income, please, start a budget. I will argue that the less money you make, the more closely you must track it, to eliminate waste.

Second, pay attention to where your money is going. Take some time to think through your expenses and how much money you need to cover your basic needs like food and rent.

Third, make every dollar you make have a purpose. What do we mean by that? Every dollar you make should go to a specific category like rent or gas. At the end of the month you should have zero dollars left on your account. That is what it’s called a “zero dollar budget” and it helps to save more and to enjoy every dollar you make. You don’t have to feel bad anymore taking money out of your rent because you forgot you needed a haircut this month. Just have a haircut category and presto!, the money will be there for you to use.

Little tips like this helps to bring back the forgotten “budget” into our lives once more. More importantly, budgeting gives us freedom. That is right, freedom. Budgeting, puts priorities into perspective, and it helps families achieves the goals they have in mind. Teaching kids how to budget is a topic for another article, but for now, just teach them by doing, they will see you and they will pick it up little by little.

Start a BUDGET here for free.

Enjoy!

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