Budget and Chill

Often times when we think of a budget, we think of restriction, rather than permission. Permission to spend your money on the things that bring you joy, permission to give your money to the causes and people who matter to you and permission to keep a roof over your head, clothes on your back and food in your belly. A budget-and-chill lifestyle that allows you to stay on top of your money and the lifestyle it affords you.
This budget-and-chill lifestyle is accessible to you, if you want it. How can you build a budget-and-chill lifestyle?

1. Build-A-Budget

There are two types of budgets we tend to have:
☆ the budget in our heads – how we think we spend our money
☆ the written down budget – how we actually spend our money

Our conflict with budgeting often happens when these two budgets are not in alignment. Why?
Because the ‘budget in our head’ is usually idealistic. When we write it down we tend to write it from a place of idealism rather than from a place of reality. As a result we may find the budget too restrictive and throw it away altogether.
So how do we avoid this and write down a budget that is both realistic and ambitious?

1.  Determine the different categories of your budget. Click here for the breakdown.
2. Comb through your financial statements and record how much you actually spend in the various categories and not what you wish you spent.
3. If your actual spent is shocking, disappointing or just not serving you, pick one area you would like to change. Tweak it a little bit and divert the “savings” from that ‘tweak’ into an area you would like to grow. E.g. if eating out is taking a larger chunk of your money than you would like it to, you may decide to decrease your eating out spend by 10%. Calculate how much that 10% is and allocate it to a category you would like to increase (e.g investments.)
4. Create room for miscellaneous expenses such as bank transaction charges. This should be no more than 10% of your budget.
5. Make sure your income less expenses equals zero. The purpose of a zero budget is to ensure you plan for every cent you have. Having “extra” money in your budget shows you have unplanned money. Money that has no plan tends to fly away.

2. Automate Where Possible

Sometimes our intentions need assistance. We may intend to follow the budget we have just created, but our actions may prove different.
To assist yourself, automate your expenses where possible.
This may mean setting up standing order instructions at your bank, so that your money is automatically deducted from your account and sent to your intended expenses.
Automation removes the temptation of diverting your money to other unplanned areas and forces you to stick to your budget.

3. Track, Track and Track Some More

Budgeting is not complete without tracking. A good budget is a budget that is tracked.
Why is it important to track your budget?

1.  Our lives are always changing. Your budget needs to accommodate these changes. The budget that worked for you in January may not work for you in March. But you will not know this unless you track your budget.
2. Numbers don’t lie. Your budget, at a glance will tell you whether you can afford to sustain your lifestyle or not. Tracking will allow you to make the necessary changes that will help you live a financially sustainable life.
3. Tracking allows you to measure your goals. How do you know if you are meeting your savings goals if you are not tracking them? How will you know how much debt you have paid off if you are not tracking your debt payments? How will you know if your trip to the Seychelles is on track of you are not tracking this goal?

You cannot write down your budget and then proceed to leave it on auto-pilot. Budgeting is an active process and not a January thing that you check in July.

4. Don’t Give Up

Budgeting is a discipline. As with all disciplines it requires practice. Practice makes consistent. The more you practice budgeting, the more consistent you will become at it.
Some of the things you may do to aid you in this are:

1. Set aside a specific date and time each month to create your budget.
2. Set aside a specific day to track your spending e.g. every second Friday.
3. Set for yourself achievement rewards for every month you remain true to your budget.
4. Use a template or app that makes it easier for you to budget and track your expenses.
5. Forgive yourself when you deviate from the budget. If this is happening too frequently, perhaps your budget is not realistic. Consider tweaking it to reflect your current reality.

Budgeting is a personal finance discipline that is not always “fun” but is ALWAYS worth it. Will you give the budget-and-chill lifestyle a try? I promise you will not regret it 😀

The plans of the diligent lead to profit
as surely as haste leads to poverty.
Proverbs 21:5 (NIV)