Everyone has a budget —even if it's not always written down— and everyone has a hard time sticking to it. The trick, to make it work, is to be honest with yourself.
Don't use the word budget. It’s an ugly word that inevitably brings to mind images of Uncle Scrooge glaring down at us because we bought a pack of gum at the corner store.
No matter how dedicated we are, by the time Friday night rolls around we always reach the same conclusion. Spending $6 on a beer with friends at the end of a long work week is an excellent investment that is going to bring a lot of happiness. Saving that same $6 for later is about as enticing as a horror film called Austerity IV. Guess which one we're going to choose.
The reality is that following a budget to the letter is about as effective as dieting. Human nature doesn't deal well with frustration or deprivation, and after a while it seeks revenge. And the ONE time you finally manage to save up a little safety cushion, your car craps out, your roommate bails without paying rent, or a new gadget with the name of an apple hits the shelves.
You know you shouldn't dig into your savings for these sorts of things. And normally, you wouldn't even buy that new gadget. But since you have a bit of money, you tell yourself you deserve a little reward for having worked so hard. And BOOM! The downward spiral begins. OK fine, we're exaggerating; things are just going to get a bit tight by the end of the month.
Through trial and error, we’ve managed to uncover the secret formula to enjoying life while putting a bit of money aside. It's not perfect, but it's simple:
A RAINY SUNDAY MORNING + A BIT OF HONESTY = SAVINGS
Step one: choose a dreary Sunday morning, ideally not following a big night out. Take a sheet of paper, write down how much you make every month, then make a list of your recurring expenses including rent, insurance, phone bills and food.
Step two: a bit of honesty. There's no one looking over your shoulder, so let it all out. If you never pay your upstairs neighbour for that shared Netflix account, scratch that expense off the list. If you spend more time in restaurants than grocery stores, add a line for that expense. So you buy organic gourmet pâté for your cat at $20 a can. No judgement. The important thing is just to understand your consumption – and your cat’s.
Third step: Profits! If you earn a reasonable salary, aren’t weighed down by debt and don’t live a rock star lifestyle, there should be some money left over when you subtract your expenses from your income. If that’s not happening, you should be asking questions. You might be really underpaid, or living above your means.
Take a look at the money you have left over and ask yourself how much of it you can realistically save each month.
Don't be too extreme. Sometimes, you won't feel like making lunch with the old carrot, jar of mustard and half crust of bread you have left in the fridge. If you give yourself some leg room, you'll have enough to indulge on a regular basis and still be able to save without feeling like you're depriving yourself.
And the best part? That crappy Sunday morning only needs to happen once per year. The rest of the time, you can enjoy life, cover your ears and scream "LA LA LA" every time you hear the word "budget."
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