How To Budget, Part 1
How To Budget – Laying Your Foundations
Budgeting is about making sure your money covers the things you really want it to cover, juggling various needs to make sure the things that really matter to you don’t get left out in the cold. So before you even begin to crunch the numbers, it is vital that you clarify what you really value. One reason budgets so often fall by the wayside is that they aren’t a true reflection of what we really want and need. We only really get behind something if it really matters to us. Imagine, for example, that you are budgeting for huge mortgage payments towards a beautiful home when what you really value is time with friends and family. Over time you find that coffees, meals out, weekends away, gifts, phone bills, and a whole heap of other “keeping in touch” costs eat into the money you budgeted for your mortgage.
Does that mean you are bad at sticking to a budget? Or does it mean that your budget did not reflect your real values? Remember that one of the Principles Of Thrifty Living is to Work With The Real Not The Ideal… A budget that reflects your true values is going to be a lot easier to stick with in the long run so it pays to start off by looking – realistically – at what your values are.
Getting Real Value For Money – Finding Out What Matters Most To You
Take time to sit with a pen and paper and list the things that matter most to you. Remember that values are ideas not items or spending areas. So don’t just list what you want/need to spend money on – for example, ‘rent’. Instead list what matters to you in life – for example, ‘freedom’, ‘family’, ‘flexibility’, ‘security’… Any of these values might be met by paying rent but paying rent is not, in itself, of value to you. Ask yourself whether the thing you are about to write down serves a purpose or is an end in itself. For example, you might realise that ‘career success’ is not intrinsically valuable to you, but helps you get ‘social status’. In that case, ‘social status’ is what you really value – so that’s what you write down.
You can get more advice about discovering what you really value at www.mindtools.com and download a free Core Values Workbook at www.dawnbarclay.com. You may find that some of the things you are struggling to afford aren’t worth the money you spend on them. Once you know what you really value, keep thinking about whether you are really getting value – your value – for money as you draw up next month’s budget.