The following is a post by MPFJ staff writer, Derek Sall. Derek is the owner of the blog, LifeAndMyFinances.com, where he teaches people how to get out of debt, save money, and become wealthy.
Do you remember when you were a kid and you were so excited to ride a 2-wheeler?
You were going to hop on and show your dad how talented you were, immediately riding away without his help. This is not how the story actually went though did it? Instead of riding like a veteran, you ran your bike into bushes, stacks of tires, buckets, and perhaps even parked cars in the street.
Beyond this, you may have even fell down when there were absolutely no obstacles. Your visions of perfection were quickly tarnished, and you grew increasingly frustrated at what you thought would be easy.
Some of you may have thrown your bike down and quit (perhaps more than once), storming inside in frustration (and probably crying to your mom). You thought you would never learn to ride that stupid bike, but you eventually did, didn’t you?
The Infamous Budget
Around tax time, many of us begin to wonder where all of our money has gone each year. Those tax documents claim that we have earned $50,000, $70,000, maybe even $100,000, but what do we have to show for it?
A piddly-nothing savings account with $550 in it. What happened? How could we earn so much and keep so little? This is the point where we decide that we are going to grow up and ride that 2-wheeler. In other words, we are going to start tracking our money and make a budget.
Before the new month begins, we write all of our necessary expenses down on a piece of paper and vow to spend no more than that amount during the next month. Let’s say this totals to $2,500.
We Scrape Our Knee and Break Our Arm
The month begins and we are excited. If we can get through the month following our budget, then we will have an extra $800 that can go into savings. Finally, a beefy savings account!
Everything seems to be going well for the first couple of days, but then we notice that our car is making a strange sound so we take it to the mechanic. Luckily, it isn’t anything too serious, but the repair still costs $80, which was not in our initial budget.
The month continues on and is dragging because we did not budget for any fun. After 20 days, you just can’t take it anymore and you head out with your friends for a night on the town. It wasn’t anything too extravagant: just a dinner, a few clothing purchases, and some drinks at the local bar.
The end of the month finally shows up and you total up you expenses. You just can’t wait to see that $800 go into the savings account, but…you don’t have $800 left. In fact, you don’t even have $500 left. Your grocery expenses were larger than expected, you forgot to include your phone and utility bills in the budget, and you also had the above expenses which weren’t initially accounted for either. After all these expenses, you only have $200 left over. You thought you were going to ride that 2-wheeler without a problem (after all, you are an adult and should naturally be good at this budgeting stuff), but it turns out that not only did you fall on the pavement and skin your knee, but you broke your arm as well!
“This whole budgeting idea is stupid, who needs it? I busted my butt for an entire month and have only held onto $200. I’m done with this.”- you say to yourself.
But, you have to remember that keeping track of your money is the only way to grow wealthy. If you want to live well in the long run, you have to be willing to scrape your knees with your budget once in a while. It will not be easy, but you will get better. Soon, you will be able to put $500 into your saving account, then another $750, and then you might be able to cut some expenses and earn a little more for a monthly net income of $1,000! If you hold yourself accountable, you will soon be riding in the Tour de France of budgeting and will be well on your way to budgeting your way to wealth!
How about you all? What strategies do you employ for dealing with discouraging set-backs in your personal finances?
Share your experiences by commenting below!
***Photo courtesy of http://www.flickr.com/photos/sahdblunders/8644936719/sizes/l/
