Developing A Budget

The Small Business Administration says the number one reason for small business failure is poor record keeping. Over the years, I have become convinced that the same is true in most homes. Relatively few families crash and burn financially because of a medical catastrophe, or a bad business investment, or because they are swindled. In truth, the vast majority of Americans who are in acute financial pain are there because they haven’t planned not to be there! I suspect that less than 10% of all households in this country work from a planned, written, monthly budget. And, without such a document—your family finances are a disaster looking for a place to happen.

Budgeting, Dieting, and Root Canals

Now I want to share some practical thoughts on the “B” word—budgeting. Yeah, I know. No one likes to budget. We associate it with pain and austerity. Budgeting means scrimping—having to say “No” to all the things we want to do. Budgeting, dieting, root canals—they all sort of go together don’t they?

Believe me, I know how you feel. I don’t like budgeting either. But I learned a long time ago that there are usually two ways to do anything: The right way, and the easy way. Although I call it the easy way, it’s actually only easy in the short-term. Those “easy monthly payments” have destroyed many a family’s financial health. When you think about it, isn’t this the root of a lot of our pain: Putting immediate gratification ahead of long term planning? Ever since Esau sold his birthright for a bowl of Jacob’s stew, people have been making bad long-term decisions to enjoy short-term gains.

There’s A Lot In A Name

Marketing people learned a long time ago that names mean a lot. They affect how we perceive the world around us. For instance, instead of calling them “used cars,” some auto dealers use the phrase “pre-owned automobiles.” Television reruns are called “encore presentations,” credit card interest payments are called “service charges.” Just last week the network news reported that federal nuclear energy officials want to put a high level nuclear waste dump in the Yucca Mountains just north of Las Vegas, Nevada. As you might suspect, the citizens of that area aren’t very enthusiastic about the plan. But, not to worry, the government boys aren’t going to call it a nuclear waste dump—they’re calling it a “repository.” Ah, that makes it seem so much better, doesn’t it?

Instead of calling it a budget, why not find a word that speaks to the benefits that come from a budget? After all, a budget allows you to manage your wealth so it’s there when you need. It gives you the freedom to live life with joy, peace, and dignity—instead of dodging bill collectors, and never having the money to invest, save, or give to others. So why not look at the positive side of having a budget? Why not think of it as your Personal Financial Freedom Plan? Ah, sounds better, doesn’t it?

Why We Don’t Budget

There are about as many reasons for not budgeting as there are people without budgets. But most of these “reasons” fall into one of three broad categories:

1) “I don’t know where to start!” These are the folks who feel overwhelmed by life and the money pressures they are facing, and one more straw will be enough to break the camel’s back. They want less stress and confusion. From their perspective, doing a budget is just one more complication they don’t need! What these people fail to realize is that a budget is the first step towards relieving their pain. Just as it’s painful to lance a boil—it’s the only way true healing can begin. The good news is that a budget is simple and not very time consuming. A few minutes spent in the budgeting process just before the month begins can bring financial balance and tranquility for the month ahead.

2) “I’m not a geek—money stuff confuses me!” This is like saying, “I’m not a chef—so I’m not going to eat food.” To properly handle your income doesn’t require any special classes or degrees. All it requires is a little basic knowledge and a willingness to change one’s behavior. And, remember, it’s not a question of whether or not your income is going to be spent. The only question is: Are you going to control the spending, or is the spending going to control you?

3) “Budgeting is such a downer—it’s such a negative thing to do!” I take special exception to this complaint. Remember, the source of stress in all of our lives comes from the feeling that we don’t have control over our environment. As long as the steering wheel in your car functions properly and allows you to turn it as you wish—you’re relaxed. But how would you feel if the steering wheel suddenly stopped responding as you are driving down a mountain road? That loss of control would lead to a lot of stress wouldn’t it? It’s the same with budgeting. When a person seizes control and begins taking charge of her money, something wonderful happens. There is a rightful sense of power and control—a sense that one has control of what happens in his life. All in all, it’s a pretty good feeling.

Another Way To Look At A Budget

Now, allow me to present the other side of the case for budgeting. The following list of budget benefits is only a beginning. You could probably add other points to the list but, for starters, here are some of the pluses of having a budget:

• No more creditors calling the house at all hours;
• Never having the waiter come back to the table to inform you that your credit card “is over it’s limit and didn’t clear;”
• Using cash in the bank to pay for an Hawaiian vacation;
• Never having to stall one creditor to pay another;
• Never regretting the gifts you bought for Christmas when the January bills arrive;
• Always having money on hand when a worthy need comes along;
• Never having another fight with your spouse over money issues.

The book, No Debt No Sweat! goes into further detail:

• 5 Keys to a Successful Budget
• There is a Multiple-Page Budget Form
• Keys To Sticking To Your Personal Financial Freedom Plan
• The Diggs’ Family’s Secret Weapon
• The Difference Between “Need Money” and “Seed Money”
• There are also sections on:
• 10 Steps To Keeping the Wolf From the Door
• The 6 Secrets of the Great Investors
• 3 Ways to Achieve Financial Freedom Without A Mask and A Gun!
• How Mutual Funds Work
• How to Retire With Dignity

Click here to learn more about the book, No Debt, No Sweat!