Understanding Budgeting: A Key to Financial Health (and how to make it less boring)

What is Budgeting? Budgeting is boring! Ha ha, just kidding..or am I?

Ok fine, budgeting is the process of creating a plan to manage your income and expenses.

Yeah, yeah, we all know this right?

Budgeting involves tracking how much money you earn, how much you spend, and how much you save. (It is boring!)

By setting up a budget, you can make informed decisions about your finances, ensuring you live within your means and work towards your financial goals.

So, do you budget? Huh? Do you? TELL ME THE TRUTH! Well if you do budget, congrats! (and please share your tips for making it less boring in the comment section below.

Well I didn't budget for a long time, because it's hard to make myself do boring things. Honestly, I still find it difficult and I tend to leave it at the bottom of my to-do list. But.... I do recognize its importance. I want financial independence. I want to achieve my financial goal of earning a fat 1M$ no matter how long that takes because this goal will push me to become my best possible self and create a solid foundation for the future well being of my family.

So, here are the boring reasons...Why Budgeting is Important:

Budgeting is crucial for achieving financial health and independence. It helps you:

• Track Spending: Understand where your money goes and identify areas where you can cut back.

• Save Money: Allocate funds for savings, emergencies, and future investments.

• Avoid Debt: Prevent overspending and reduce reliance on credit.

• Achieve Goals: Plan and save for short-term and long-term financial goals, such as buying a home, funding education, or retirement.
  

If you want to start budgeting on your own here's what to do:

How to Create a Budget:

1. List Your Income: Include all sources of income, such as salaries, freelance work, and any other earnings.

2. Track Your Expenses: Record all your expenses, including fixed costs (rent, utilities) and variable costs (groceries, entertainment).

3. Set Financial Goals: Define your short-term and long-term financial goals.

4. Create Categories: Divide your expenses into categories, such as housing, transportation, food, savings, and entertainment.

5. Allocate Funds: Assign a portion of your income to each category, ensuring your expenses do not exceed your income.

6. Review and Adjust: Regularly review your budget and make adjustments as needed to stay on track.

Boring Tips for Effective Budgeting:

• Use Budgeting Tools: Leverage apps and tools like Mint, YNAB (You Need A Budget), or simple spreadsheets to track your finances, like this one my sister made for me.

• Be Realistic: Set realistic spending limits and savings goals based on your actual income and expenses.

• Stay Flexible: Life changes, and so should your budget. Be prepared to adjust your budget as your financial situation evolves.

• Monitor Regularly: Keep a close eye on your budget regularly to ensure you stay on track and make necessary adjustments.

Kandice's Process for Budgeting Well Enough:

The coach inside me knows that I need equal or greater structures and support in order to counteract the resistance I have to budgeting. My resistance shows up as 'this task is boring and I have other more important or more fun things to focus my attention on.

When I encounter resistance to something 'I know I should do' because it would be good for me and I actually do want to do it. I quickly journal in my Scribe and the cat scratches in my journal look a little something like this:

"Budgeting, why do I hate it? Because it's boring. Ok, what does that mean? It's not fun. Ok, can it become fun? Probably not. Do I want to budget? Yes. Why? Because if I don't know where I am how will I know if I'm going to the destination that I want? How will I know when I earn that fat 1M if I'm not tracking it? Right! So why budget? I want to know when I reach my goal. Is that enough to make me budget consistently? Probably not." But writing this has triggered an epiphany about a structure that I could implement that would lessen the boringness and keep me consistent.

On Fridays my family has pizza night, movie night because we're tired at the end of the week and the kiddos love it. Unfortunately, young children also love re-watching the same movies again and again. So rather than re-watching 'The croods" for the 20th time, might I take one Friday out of the month to budget during the length of the movie? Might that even make the activity more fun for me? It actually would!

I try to keep in mind that I don't need to be the perfect mother or the perfect budgeter, I just need to try my best and find what works for me.

I don't know what resistance you encounter. You could try making budgeting more fun by treating yourself to a glass of wine or a scoop of Haagan Daaz Chocolate Peanut Butter Ice cream. It took me less then 5 mins to journal through my resistance to budgeting. If you try journaling about budgeting respond in the comments below what epiphany came to you, or let me know if your resistance is still blocking you and maybe I can help.

Conclusion: Budgeting is a powerful tool that empowers you to know where you are currently and keeps you on the path towards your financial goals. By creating and sticking to a budget, you can reduce financial stress, avoid debt, and work towards a secure financial future. Start budgeting ASAP and pave the way to financial independence and peace of mind.

TL;DR: Understanding Budgeting

Budgeting involves creating a plan to manage your income and expenses, helping you track spending, save money, avoid debt, and achieve financial goals. To create a budget:

1. List your income.

2. Track your expenses.

3. Set financial goals.

4. Create categories for expenses.

5. Allocate funds to each category.

6. Regularly review and adjust your budget.

Make budgeting as easy as possible for yourself in order to be consistent and take control of your finances to work towards financial independence.