To budget or not to budget?
It’s the beginning of a new year. All the parties and celebrations have come to an end and it’s time to dismantle the tree and return to the usual routine. Sadly for many families the Christmas season may have taken as much toll on their bank balance as it did on their waistline and now it’s time to assess the damage. In circumstances like this there is only one sensible plan of action, budget! Yes, I know that this may be a scary word and has no fun or happiness attached to it but when applied in the right way and approached with a positive mindset a budget can make your life a whole lot simpler.
The fact of the matter is that no matter whether you’re in debt and need to find a way out, or if you’re earning enough for your household needs, budgeting your finances is still a good idea. A budget isn’t just a tool to curb spending and take the fun out of shopping trips, it’s actually about taking control of your finances and knowing where your money is going. When done right a budget can liberate you from money worries because you are controlling your finances, instead of your finances controlling you!
Where to start
The best place to begin a plan for your finances is to write it down. There are many budget templates available online to help you do this and it’s an important place to start because you can’t stick to something you’ve forgotten.
Next you need to figure out your income. How much money comes into your account every month after tax? If you are paid on a weekly, biweekly or on a commission basis you may need to do some calculations to get to the final figure but working on a month by month basis will easier to manage.
Once you have this figure, you need to look at your expenses. This can be a bit daunting but break it up into categories and it will make life easier. Start with your fixed outgoings, things like rent or bond payments, medical insurance, car payments, school fees, water and electricity etc. that are always the same month on month. When you’ve done that, start adding in your other expenses. This is where you would include things like phone bills, groceries, entertainment and recreation costs. Don’t leave anything out. If you like to get a coffee on a Saturday morning or go to the movies once a month, include this in your breakdown, because if it’s not there you wont get an accurate picture of what you’re spending.
When this is done you need to compare the amount that you are bringing in with the amount that is going out. This can be hard to see, especially if your spending is larger than your income but don’t worry this is where you need to start making some changes. You need to decide which expenses are absolutely indispensable and which you can amend or do without completely. You need to be honest with yourself and possibly make some hard decisions but it’s the only way, if you’re living beyond your means, that you will get some control of your financial situation. Maybe you don’t need to get a coffee every week? If you’re eating out regularly or going to the movies or paying for extra TV channels these are all things you limit, if your earnings don’t stretch far enough. It’s not going be easy to say goodbye to some of the ‘nice-to-haves’ but they are, after all, luxury items and until you are able to afford them, they aren’t worth the stress that comes with overspending and getting further and further into debt. If you are really struggling the most sensible thing to do is find a financial advisor who will be able to give you proper guidance and advice to help you plan your way forward.
Don’t be anxious
Our finances are one of those areas in life that can dominate and cause anxiety if we let it take control. It doesn’t matter how you look at it, money is a necessary part of life but that doesn’t mean it is the be all and end all. It is a means to an end and needs to serve us rather than us serving it. The bible has a lot to say about this topic. In Luke chapter 12 verse 22 Jesus said:
do not worry about your life, what you will eat; or about your body, what you will wear. For life is more than food, and the body more than clothes. Consider the ravens: They do not sow or reap, they have no storeroom or barn; yet God feeds them. And how much more valuable you are than birds!
God is interested in our finances. He doesn’t want us to weighed down with worry about our daily needs to a point that it consumes us. The bible tells us that if we are so concerned with money and wealth it will become like a master to us, taking the place that rightfully belongs to God. We need to remember that money is no more than a tool, but it is the way in which we use it and manage it that can cause problems and if we are seeking security in wealth that we can only find in God, we will always be disappointed.