In my program on financial literacy called The Buck Stops Here, I teach many new skills. We usually wind up needing these skills because somewhere along the way we missed that class on financial savvy. Maybe there was no class. I’ve only ever known borrowing from Peter to pay Paul and then hitting up Matthew and Mark. It only works for so long. If you’re still reading, the good news is that you’re about to change all that.
People fail at diets and budgets because they take on too much all at once. I suggest a gentle approach. But hey, it’s your life.
TRACK SPENDING
Track your spending for a minimum of three months to get a real sense of what your spending habits are. Where are you leaking valuable money? Tracking is like slowly pulling your head out of the sand. It gives you a lazer sharp focus on where the dough is going.
Own it. It’s your life and you need to take responsibility for it if you want to make changes. When you have had a chance to digest it, you’re ready for the next step.
OPEN THE BILLS
In this day and age, many of our bills are taken directly from our bank account. How many of your bills are stacked in a pile unopened? Take inventory of you must pay out each month. Print off a statement of each bill and don’t miss any. Stick them in a binder – let’s call it the budget binder. Don’t miss any – gym membership, car insurance, line of credit, student loan payment, etc.
WHAT IS COMING IN
How much money do you have coming in during the month? Many folks have a steady income – job security and they can count on the same money from week to week or month to month. Fixed income is easier to budget. Entrepreneurs have a different reality as you know. But you can still budget. What do you have coming in each month?
GET THE CALENDAR
Take your calendar and a black marker. Put the income in on the dates that you will receive it. Now take your red marker and enter the bill payments on the date that they are coming out of the account.
Don’t stop there – remember the tracking that you were doing. Look at the miscellaneous spending that went on. Put those numbers in if they are realistic.
No one is watching you. Don’t try and make a budget of what you should spend. Make it real – what will you spend your money on this month? If you are in deficit, you are in deficit. You can’t change all of the bad habits in one day. Give yourself a break. Have a long hard look and again, own the budget. It’s yours and as scary as it is, it is real.
We are all done sweeping things under the rug.
MONTH END EVALUATION
At the end of the month you pull it all out again. Because you have continued the practice of tracking your spending, you can now enter the actual numbers. You may do this periodically throughout the month. Either way, it’s all there in black and red. How did you make out? Were there any surprises? Do you need to make a change or two. It is up to you where you go from here. Do you need to take a second job?
It is your choice after all The Buck Stops Here.