Your Budget is Useless
I’ve mentioned before why I feel everyone needs a budget, so why I am saying your budget is useless? Well, on it’s own, your budget gives you relatively no value. It is only a set of numbers you can reference. It is the ACT of budget-ING that brings you the real value. After talking with thousands of people about budgeting, I've found when we think of a budget as the solution to our financial woes, we fail, but when we master the art of budget-ING, we soar!
I am reminded of the quote from Dwight Eisenhower when he stated “When preparing for battle, I’ve always found a plan to be useless, but planning is indispensable”. The same can be said for our budgets and budgeting. We can create a budget every month, but the minute life starts to happen, our budget is immediately outdated. It is really the interaction we have with our budget, the act of budgeting, that makes things happen. Each inflow (inhale) gives us the opportunity to assess how things are aligned and where we need to allocate money. Each outflow (exhale) is a conscious decision where we have checked out the budget to ensure we are spending on what we value.
The act of budget-ING is very simple and only demands 4 things from us. By following the 4 rules of You Need a Budget (YNAB), we proceed from a position of power with our money.
- Give every dollar a job - allocate every earned dollar to your needs and wants. You don't allocate any money you do not have on hand at this very moment. When you get paid again, allocate that new money to your current needs, wants, and goals again.
- Embrace your true expenses - breakdown those infrequent expenses into manageable amounts so you are not caught off guard throughout the year. (Think of car repair, gifts, and property taxes to name a few)
- Roll with the Punches - this one is a life saver for those who have tried to budget in the past and believe they’ve failed the minute they overspend in a category. With this rule, you simply adjust for any overspending in one category by shuffling funds from another unused category until you have a chance to recover.
- Age Your Money - over time, the money you spend becomes “older” in a sense that the dollars you are spending were earned further and further in the past. Think of spending on something today knowing those dollars you’ve spent were earned 2 months ago. That is a huge accomplishment.
Our budget is just a document or set of numbers that are a snapshot in time, but if we have a method to follow for budgeting (these 4 rules) and a system that makes the budget itself easy to keep up with (the budget software), we can win at the budget game. We can gain clarity, peace and space with our money!
I can show you how to fast track the use of YNAB as a budgeting tool and gain a mastery of these 4 simple rules. Reach out anytime to see how you can gain peace and clarity with your money.