Do you really need a budget?

Do you really need a budget ?
The importance of a budget when you want to be live debt free.

Making a budget can be a daunting task and a deal breaker for a romantic night with your spouse or significant other. But it doesn’t have to be that way if we change our mindset.

Is it necessary? Absolutely! Does it really matter even when you make more than enough to cover your expenses? It does if you want to take charge and go from just having enough to having a surplus of diligent mighty dollars that go to work 24/7 for you.

In my personal experience, nothing has helped me more than budgeting. And to be fair, I have always made a budget along with my wife. We go through expenses, making sure we have enough to cover our monthly expenses and move on.

However, I am talking about going beyond covering expenses and really analyzing every item, so that we can maximize our income and make those dollars go farther.

In the past, we would take a piece of paper and jot down mortgage, utilities, groceries, kids lessons and other expenses. However, every month it seemed like the $400-$500 we were supposed to have left at the end of the month had simply vanished. 

It wasn’t until about a year ago when I heard this idea of thinking of myself as a CFO, managing my household income and expenses as if it was a company. With that came our monthly meeting report, where we both sat down to discuss different items; decisions were made, and before we knew it we went through a whole year with no debt for the first time ever. We even managed to put a brand new roof on our house without any credit or financing.

If you are in a financial predicament( We have all been there), first of all, take control of your money. For that, you need to know where your money goes. I highly recommend using either Excel or Google Spreadsheets. 

Start by knowing how much income you earn in a month; that’s the easy part.

Next, start by noting what your fixed expenses are. Understand by fixed expenses your mortgage or rent, utilities, groceries, etc; anything that you pay for, that is a need ( Not cable) and has somewhat a constant value each month. If the value is no constant, try to work it so that it becomes constant. In other words, if you have fluctuations in your grocery bill from month to month you have to find the sweet spot of what you should spend every week for your groceries. 

After that, the game is on! Subtract your expenses from your income and whatever is left challenge it. Notice how much you are paying for it a month and yearly. Question how you are allocating your money in movies, restaurants, all the new crap you buy and ends up in the closet, garage, garbage or even worse a storage place. Are all those things necessary? Could you have made it through life without those new things?

The minute you start analyzing your finances that way and you take control things will start falling into place. You will feel better about yourself and the decisions you are making for you and your family.

And what once was a deal breaker for a romantic night, might become nothing short from candles and wine /;-)

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