Photo by: worldislandinfo

My thoughts have hovered around “planning” lately.

Maybe it’s the new year.

It’s incredible the difference a little planning can make in almost anything.

A budget is simply a way to plan what you’re going to spend your 95% on.

When we don’t plan where our money will go, it might go towards our wants before our needs.

We might even spend more than we earn.

When we fail to plan where our paychecks go, they tend to leak out into less important, or irrelevant things.

Budget’s don’t have to be perfect to make incredible improvements in your life – the simplest budget plans are infinitely better than not having any at all. When you learn how to start a budget plan, and stick to it, you set yourself up for a lot more success down the road.

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PS – A huge round of applause for those of  you who signed up for the January 2010 Challenge. I have been quite inspired by how many have signed up.

I hope you’ll email me when the month is over to tell me how you did!

And it’s not too late to start your own first month of budgeting. Just sign up for the emails in the sidebar to the right. It’s wicked easy.Similar Posts:

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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:

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Photo by: paalb

Yes, half of budgeting is tracking your spending. I know, it’s not very sexy, but at least it only takes about 2 minutes a week.

Knowing where you are spending your 95% is powerful information for finding leaks in your paychecks, adjusting future budgets, and evaluating what you value. But tracking the money you’ve spent is only half of your budget.

The other half is just as important: how much money do you have left, and what is it set aside for?

Is it where you want it?

This is the half that helps you makes sure your needs are being met, that you’re living within your means, and that you have enough to enjoy your life.

If you’re keeping things loose and flexible, you can easily do a lot with what’s left of your personal budget this month. Take a look at it really quick. Are you happy with what’s left in each category, or do you need more money for, say, food this month? If so, where will that money come from? Fun? Books?

Move some funds around if you think you should. It’s your budget.

Did you spend less on gas than you thought? Should you move some of that extra money towards short-term savings, or would you rather put some extra cash towards a fun weekend?

As long as you have enough left in your “needs” to make sure you’re good, the rest can go anywhere you think it should.Similar Posts:

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Photo by: vrogy

Imagine Jack and Jill running up their hill towards the well. But instead of fetching a pail of water, they’re filling their bucket with their paychecks. With their bucket now full of money, they dash back down the hill (Jack watches his step this time) with plans to pay for the things they need and then get some things they want.

They take their bucket with them wherever they go – the grocery store, the mall, and out to eat. A couple weeks pass and Jack and Jill are ready to climb the hill again for new paychecks, but their bucket is emptier than they both expected. Where did all of that money go?

Sometimes it feels like their bucket is leaking.

If you’re spending too much on things you don’t really value, your 95% is leaking.

Instead of that money going towards what’s important to you, it drips out to the little temporary things of everyday life.

Without a budget, your paychecks could just be splashing around.

One of the major reasons people want to start a budget is they’re worried they’re spending more on certain things than they really want to be. Perhaps they feel they’re consistently spending too much on fast food, or entertainment. Maybe they have a donut habit they want to cut back on. Whatever it may be to them, there’s something else they’d rather spend their money on, and they want a budget to help plug those leaks.

The good news is, when you plug up your leaks, that money starts filling up into categories you value more.

Every once in a while, look over your budget to see where your money is going and see if you can spot any leaks.

If you’re spending more than you want to in one category, move some of those funds to another “more important” category like your short-term savings, or a fun goal you’re working towards, or a credit card balance – anything more important to you.

You’ll be surprised how quickly those plugged leaks start filling up elsewhere – it’s almost as if you had money you didn’t know about.Similar Posts:

• Adjusting your budget to match your spending
• Your budget is a goal setting tool