Photo by: schmilblick

Months ago the wife and I decided to cancel our TV.

This was a big decision for us, and I actually fought against it for a while. I was a bit of an addict.

What was interesting was that we knew that TV was a Want, but it was actually part of our Needs on our budget.

Now, TV is obviously not a need (for most people), but the bill for the TV was attached to the Internet (which is very much a need for us) and the telephone. It was just easier to lump the same bill into the same category – so it hid there for a long time.

But it wasn’t accurate, so we made it a Want.

With a new and more correct perspective, it was easier to realize we wanted our 95% going to more important and more satisfying things.

(Also, pretty much anything we want to watch is available on the internet these days.)

I’m not saying everyone should cancel their TV, but maybe you can re-look at your “Needs” and see if any “Wants” are hiding in there.Similar Posts:

• Make purchasing decisions easier by following a budget

Photo by: notsogoodphotography

Contrary to popular belief, I’m not very passionate about budgets.

Budgets are kinda boring.

Ok, they’re very boring.

I am, however, passionate about the benefits of budgeting.

• I love showing people how to be in control of one of the most influential factors of their lives.
• I like sharing how to stop wasting money on things you don’t value.
• It’s impressive to me when somebody knows their 95% enough to say ‘no’ to something they can’t afford.
• I get excited about someone buying something they really want, and knowing they can afford it without credit.
• I love the idea of parents falling asleep knowing their family’s needs are met this month.
• It’s exciting to think that people are using their budget to put a little away every month.

And it’s fun to write, and post, and hope it makes a difference.Similar Posts:

My Little Family

I’ve written before about how a budget can be a a top-down view of your 95%. With it, you can see what you can afford, what you can’t, and what you can shuffle around if you need to. It’s a lot better than guessing in the middle of a “should I buy it?” moment.

But budgeting also gives you a great map of what you value. After a few months of fine-tuning your budget, you’ll start to see a pretty accurate picture of what you really want. It’s a neat little side-effect of budgeting.

Knowing what you value ,and budgeting for it, can be a huge source of contentment in life. Knowing that you’re putting your hard earned dollars towards what matters most is a comforting feeling.

The opposite – not knowing what you really value – can lead to a lot of leaks in your paychecks and a lot of perpetual and unhappy spending.

Some things we value greatly.

You’ll find yourself budgeting these things first,  making sure they’re covered before anything else.

They’ll align with what’s most important to you in your life. When I had my son, a lot of things I used to value suddenly meant much less (or nothing at all) to me.

We need these things the most, they bring us the most peace, the most fun, or the most satisfaction. They help us reach our goals in life.

Some things we value less.

You’ll find yourself budgeting these things with “what’s left.”  Our paychecks can tend to leak into this less-satisfying realm quite a bit if we’re not watching our budgets. Stay diligent and you’ll see these leaks getting plugged up over time.

Others we do not value at all.

You’ll start to find that you haven’t even included these things in your budgets for a while – a pretty good indicator you don’t really want your money going towards them.

Take some time to review your budget (or start one) and see if you can’t find what you really want your money going towards. Do some adjusting if you need to – it will be worth it.Similar Posts:

• Simple ways to save money by using a budget
• Adjusting your budget to match your spending

Photo by: Joop Dorresteijn

Building a Strong Budgeting Foundation

Still Standing

Over the weekend my wife and I had a great conversation with some youth about foundations and roots. We discussed the forces that might be working against a building, or a tree, that might bring them down – and why they would need a foundation (or roots) to withstand those forces.

Our conclusion was that good foundations and good roots need two qualities:

They need to be deep and they need to be strong.

We have many foundations in our lives and our 95% is a big one. It not only “keeps us up” from month to month, but also helps us weather storms and constant change.

The two principles of a good foundation seem to correspond to the two main budgeting principles I try to evangelize here on WithinMeans:

Living Within Your Means Will Make Your 95% Deep

As you use a budget to actively spend less than you earn, your wealth and safety will increase from month to month, a little at a time. Your financial foundation will get deeper and deeper, and you’ll find yourself weathering unexpected costs better.

Budgeting Needs Before Wants Keeps Your 95% Strong

Spending money on what you want, then hoping you have enough for your needs, is a weak foundation at best. If your needs are budgeted first every month you may see some erosion on your wants, but the important things will always have what they need to keep you standing.

How else can you deepen and strengthen  your 95%?Similar Posts:

“Yeah?”

“You bet! I can tell from your trendy glasses that you’re a music kinda guy and this baby has iPod interface. All your music at your fingertips!”

“Nice!”

“Plus it has tons of cup-holders, plays DVDs and video games for the kids, has a GPS system, and tons of other fun things.”

“So, where are the wheels?”

“Oh… Did you need wheels?”

Photo by funkblast

Needs and Wants

As a music geek, you might persuade me that access to my iPod might be more important than having wheels while driving, but probably not. There are some basic fundamentals that a car needs to function as a car, and a lot of things it doesn’t need to work. Not even GPS.

When you’re budgeting your paychecks, make sure your 95% at least has wheels. Budget your needs before your wants.

When you fill up your “need” funds first in your budget, you give yourself peace of mind. Instead of lying awake at night running numbers in your head, you’ll know you have money for the mortgage, and the insurance, and the other bills, safely set aside. It’s a lot less stress in your life at a very little price.

That said, I hope your budget lets you have the GPS too.

It’s not about good vs bad, it’s about first vs second.Similar Posts:

• Make purchasing decisions easier by following a budget
• You are the boss of your budget, leave room for fun

There’s an electronics store here in the Phoenix area that I dart in and out of once every couple of months. This store has a feature that always makes me laugh – a thousand mile long corridor they shuffle you through before you can check out.

The corridor is lined, of course, with impulse buy items. Candy as far as you can see, iPod covers, pen radios, $5 DVDs of old B-movies, batteries, toys; the sheer scope of last minute temptations along those never-ending walls is impressive, in its own way.

But I’m not going to preach to you the financial pitfalls of impulse buys (maybe later), or the evils of retail marketing for tempting you. Nor will I give you a long list of the psychological motivations behind our impulse buys.

Sometimes impulse buys are fun, useful, or just convenient.

There are honestly times where I could use new batteries, or I really am in the mood to try a “Peanut Butter Twix.”

On a larger scale, my wife and I once stumbled upon the perfect rug for our baby’s room while just browsing. Instead of spending more time and energy shopping around for a better one we decided to nab it. We still love that rug (in fact, it’s migrated into our living room).

Spontaneity can spice up your life, or fill it up with crap.

The trick is really simple: keep your impulse buys within your budget – whether it be creating a “Fun” category or “Misc” or even a flat out “Impulse Buys” category. Just make sure your needs are funded first, as well as other more specific wants that you value more.

Following a budget should not kill the simple pleasure of a good find, a quick treat, or a convenient purchase. Give yourself room for spontaneity and enjoy your budget. If you buy something random, use your “impulse buy” funds and don’t feel guilty about it. When those funds are used up don’t get anything “extra” until you have funded that category again. You’ll start to learn what’s worth nabbing and what isn’t.

Are impulse buys dangerous? Yes, they can be. Just use your head and remember your map.

(Photo by: The Consumerist)Similar Posts:

• Adjusting your budget to match your spending
• Your savings are important, but so is the rest of your money.

You’re in that moment.

You’re at a store and you see something you want. You start running numbers in your head. Can you afford it? If you get it, will you still have enough left for that upcoming bill? Will you have to put off that trip you’ve wanted to take for another month?

To buy, or not to buy?

When you’re staring at that price tag, it can feel like you’re in a maze and the hallway you’re looking down only turns left and right. You can’t see around the corners, the consequences aren’t clear, and you’re not really sure which way to turn.

Photo by: edlimphoto

• Will you run into trouble? (It will eat into your Needs.
• Will you hit a dead end and have to backtrack? (Delay the purchase of something you value more.)
• Or is it perfectly okay to buy it right now? (Green-light to the exit!)

Want to cheat?

Your budget gives you part of the map, so instead of your in-the-moment perspective you get a top-down-view of the maze.

Photo by: kelp1966

Glance at your budget before you go shopping and you’ll always have a solid number in your mind of what you can and can’t afford.

With this top-down-view you’ll know if it leads to trouble, a dead end, or an exit.

The maze is always changing. Fortunately, it only takes about 3 minutes a week to update your map.Similar Posts:

• Adjusting your budget to match your spending
• Keep your budget in front of you

Let’s call that your 100%.

There are hundreds of thousands of highly paid, highly intelligent, and highly trained individuals out there whose sole purpose is to help you maximize what you do with about 5% to 10% of your income: your savings. They help you save it and help you invest it. They know lots of fancy financial things and use lots of fancy financial words, so you don’t have to. They’re great and your savings should be getting a lot of attention.

So what about the other 95% of your income – the 95% that you work with every day of your life? The 95% that you take to the grocery store, and pay the rent with, and take your family out to eat with?

How much attention is it getting?

Your 95%

That 95% is one of the most important and most influential aspects of your life. It’s a huge factor in your lifestyle, your relationships, and your options. Of course, it does not define you – but big or small your 95% deserves your attention and care just like your other 5%.

That is why WithinMeans is about budgeting.

Budgeting puts into your hands a simple tool to help you manage your 95% and make sure you’re using it to make you as happy as possible. And you don’t need a finance degree to budget your money well, just a basic understanding. You can keep it simple and easy, and see life changing results.

What are you doing with your 95%?Similar Posts:

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