How to Budget 102

In How to Budget 101, you learned that there were three important steps in beginning the financial budgeting process. The three steps given above are to (1) inform you of who you owe and how much you owe, (2) distinguish what you need versus what you want, and (3) breaking down just where all of your money is going. Now that you have this knowledge, it is time to put the steps into action and save! The second phase of budgeting is here and giving you the perfect reasons to use your money wisely. The next lesson in budgeting deals more with your mental state than anything else. We have all been brought up in a materialistic world where money is everything. Money unlocks all kinds of doors. Convincing yourself of what you need versus want is a big challenge. I am a living witness. It takes time, determination, and strong will. Thinking of how great the consequences can be is a great incentive to save. There are a few more steps involved in the budgeting process.

Be Specific about Goals: Even if your goal is to save for a small period of time, it would still be a step in the right direction. To test how receptive you would be to changing your spending habits, try saving for a two week period. Timing is of the essence. For instance, let's say I needed $200.00 to repair the sink in my house. This is a need, because we use the sink daily. In theory, lots of people would quickly state, "I do not have the money for this sink because my money has to be used elsewhere. I can patch the sink up and get it fixed later." There are two things wrong with that statement. First, 'patching up the problem will only make it worse. Then, when you do decided to get the object repaired the right way, it will end up costing twice as much. Second, though you may feel that you do not have the money for that particular problem, you conveniently have it for other trivial matter like shopping at department stores or eating out frequently. Thus, if your needs and wants are separated and you've established (from budget 101) that your needs need to take priority over wants, you will then see things in a clearer light. You will then forgo the trivial matters and save up the money to get the sink (or other important item) repaired in no time! Be specific in what you are saving for, and have it repeated to you so that you can save accordingly.

If I purchased groceries that would last two or three weeks and avoided spending my money at restaurants, those savings alone would amount to a considerable sum of money. In fact, you would be surprised at how much we all consume. The money being saved could then go to gas (we all know how expensive that is at this time), on a bill, or in our savings account.

So, get your timetable together and be specific on the goals you want to set for your budget. It can be short term or long term. Once again, this is all about sacrifice, compromise, and responsibility. Limit your trips and excess shopping. Half of the time, you are just shopping for items you want anyway.

Do Not Become Distracted: This is one of the hardest things you have to do once you have made the decision to budget. Distractions are everywhere. TV, newspaper, and radio advertisements are constant. They entice you to buy items that you really do not need. Sales papers will always be there. Unless something you want is limited edition, then it will always be there. Sales are happening all the time and you've seen one, you've seen them all. This isn't about appeasing your sensibilities. If you are serious about saving money and putting it to better use, then do not let the distractions get to you. One way you can avoid spending is to only bring enough when you are out and about. For instance, I only carry around my cash and debit card with me sometimes because if a credit card is near then I may have the urge to use it. I am more careful with my money and that is what keeps me in line.

Commit: Making a commitment to budget because it gives you focus. Do not be surprised if at the end of your goal setting, you become that much wealthier or even took the steps to get out of debt. If you are a person that believes in sticking to something once you start, then this plan will work for you.