One of the most important things you can do is learn how to manage your money.
Good money management habits can help you stay on top of your situation, and it opens doors in your business as well. You can’t have a thriving business if you don’t have your personal finances under control.
The right spending plan is essential to moving forward, whether you are dealing with your personal finances or your business. Unfortunately, sticking to a budget can be challenging. Many of us fail after a couple of months.
If you have tried and failed to make a budget in the past, here are some ideas to help you make a spending plan that sticks:
Start with Your Values
Too often, we make a spending plan that just includes a list of things you think you’re “supposed” to spend money or categories you’re expected to have. However, that doesn’t take into account your personal values and priorities.
Before you make a spending plan or budget, first figure out your priorities. Understanding what matters most to you can help you make sure that your budget reflects your values and priorities. Don’t try to force your money management into areas that you aren’t interested in, or that don’t work for you.
Know Your Needs and Wants
Understanding the difference between needs and wants is the most basic of personal finance concepts. However, it’s also one that trips us up.
Review your expenses, especially the regular expenses, to see what is actually something you can’t live without, and which things are really just wants.
As you make a spending plan, you will need to create a distinction between needs and wants. If tough decisions need to be made, the wants should be eliminated first.
While making your list of needs and wants, you can also rank your wants. As you make a spending plan, it helps to know which items you feel are more important. I know that dining out and my travel fund contribution are both wants. However, I would rather make my travel fund contribution than eat out. If it looks like something has to be cut from the budget
I know that dining out and my travel fund contribution are both wants. However, I would rather make my travel fund contribution than eat out. If it looks like something has to be cut from the budget during a month, I’ll forgo the eating out.
Divide and prioritize your needs and wants to make it easier to make a spending plan that works well for you.
See Your Money as a Resource
Rather than viewing your money as the end goal, consider it a resource. You are the director of your financial resources. Think about what you want your money to accomplish for you.
Before I revamped my finances last year, I took some time to sit down and create a life map. Once I had my life map finished and I knew what direction I wanted my life to go, I created a financial plan around that.
If you want to make a spending plan that you’ll stick to, it has to be a plan that helps you work toward your goals. Figure out your goals and priorities and be realistic, and you can make a plan that allows you to use your money for your benefit.