How to Stick To Your Budget: Budget Series-part Two
Have you created your budget? If not, and you need help, make sure to check out part one of the series by clicking HERE!
Make your budget and then come back to this article to read how to stick to your budget!!
Made budgets before, but been unable to stick to them?
If you have struggled to keep to a budget, fear not, you are not alone, my wife and I sometimes go well over our budget every three to four months as well. Firstly, I want to make this clear, there is no shame in going over your budget, do not feel guilty about it, it has happened and you can do nothing about it. The past is the past, the only thing we can take from it, is to learn from it!
Feelings of shame and guilt is going to help no one, in fact, the more shame and guilt you feel, the more you may sabotage yourself moving forward. I have seen it all the time when clients put themselves on “diets” when trying to lose weight, over the last ten years as a coach and personal trainer.
A budget is much like putting yourself on a diet for most people, but it does not have to be that way, because most studies on diets, and budgeting in fact, deem that it does not work when you try restrict yourself excessively.
In fact, I don’t believe that you should be restricting yourself when you go on a budget, which is where most people make the first mistake!
As soon as you look to making restrictions on yourself and your lifestyle, it is just human nature for you to follow along for a short period of time, but life will happen and it is bound to blow out disproportionally soon enough. Therefore, to make sure your budget is set up for success you need to follow along on these basic guidelines when setting up your budget;
Once you have completed a full audit of your bank statements spending over the last 3-6 months, ask yourself, are you happy with where you are at financially? Happy with the amount of savings you are making (surplus cash)? And happy with your ability to pay down debt?
If you are happy, that is great, continue along with what you are doing and just review your spending every month to two months to make sure you are still on track.
If you are not, however, the first thing you would need to do is set yourself a goal. Make it a goal that is going to improve your life significantly, something that will truly make you sacrifice a little in the short term, for long term gain.
It could be saving for a house deposit (that is why my wife and I started budgeting), it could be saving for a round the world trip for a year, it could be saving to get a ticket to Elon Musk’s first inter-planetary trip and colonisation to Mars!! (Apparently will be roughly $100,000-120,000US.)
Whatever it is, make it something that is going to be worthwhile for you, your partner if you have one, or your dog, whatever your situation is.
Got your goal? Great, now it is time to do what I like to call, reverse engineer the goal, by breaking it down into small and manageable steps!!
Want a $100,000 home deposit? Want to be able to get into your first home in two years time?
Firstly, you need to work out whether you can do that or not with the current budget you have just created…
Simple math makes out that you need to be saving $50,000 per year, or $962 per week. Does your budget say that it is possible?
If not, don’t get disheartened, there is three things that you can do, make a few sacrifices if you are not far off saving that amount each week and just make it work. Or, if you are too far off, say you are $500 per week off, you will need to make the timeline a bit more achievable.
By making it more achievable, you will set yourself up for success, rather than set yourself up for failure. The worst thing you can do is drastically change your life and go to the extreme where you are spending absolutely nothing at all, remember how I said a lot of studies say that most “diets” and budgets fail. That is why!!
So, lets say that you are saving roughly $400 per week at the moment, which is the most you can do. That works out to be $20,800 per annum. Which means, your two year timeline is not really achievable, but a five or six year timeline might be a bit more realistic.
You just need to do the math and break it down into bite size chunks, think in terms of weekly or fortnightly savings goals to get you to the bigger savings target at the end.
Think about the SMARTER goals I mentioned in part one of the budget series!
Not happy with the timeline, that is ok, because you don’t have to actually just restrict spending, you can also work on Earning More Money!!
One thing my wife and I did to save for our house that a lot of people don’t really know too much about, is that we decided that we wanted to build our first home and wanted to do it within two years. However, what we were earning was not really enough, so instead of just saying oh well, its not feasible, we will just lengthen our timeline…
We decided to sacrifice a little bit more and worked harder to earn more money for eighteen months. We had to get a deposit together of roughly $90,000 to build our first home, we had $18,000 between us at the time. Which meant we needed $50,000 saved in just over eighteen months. (First home owners grant was $10,000 and we got a small loan from Liv’s parents, which we paid off before we moved into our home)
Our savings rate was just over $640 per week that we needed. And we made it happen!!
We scrimped and scraped, we worked harder, built up side hustles and earnt more money that way as well.
The one thing that I hope you take out of this, no matter how hopeless it feels, there is always more you can do, you don’t just have to restrict spending.
Which brings me to the the Most Important part of achieving your goal and sticking to your budget, it comes down to Pure OPTIMISM and HOPE for the Future!
You cannot go out of your way to make life harder right now, if you do not have any belief in being able to achieve what you want to. It is humanly not possible for you to make sacrifices and stick to them, if you do not believe that what you are doing is going to work.
That is why you need to set a savings goal that is achievable, you need to be able to hit that savings goal for a long time and you need to make sure that you are 100% invested in making your DREAM a REALITY!
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Budgeting is hard, life is hard too sometimes, but being able to have a budget that thinks of all the things that might crop up, such as car accidents and other emergencies, holidays, bills, rent/mortgages, groceries, birthdays/gift giving, charity, pets/vet bills, insurances, rates…
Having a budget is not made to reduce your spending or restrict your lifestyle, it is made to bring you FREEDOM in your life. A budget is made to give you the life you want!
A true budget will make your life easy and will set you up for success in anything you would want to achieve. If you get the budget right, your 30, 40, 50 and especially 60 year old self is going to love you for it so much more.
If you can make a budget that you can stick to, you will be able to save and achieve your goals in the long run! And I reckon it is one of the first major steps towards Taking Back Control of your Wealth, your Health and your Life!
Until next time,
Take Back Control
