Why Your Budget Sucks!

So a lot of people have done the right thing and developed a budget for themselves. Usually on the back of seeing an expert on T.V, reading the paper or a finance book.

With this knowledge in hand they look at the household income and start allocating money all over the place. You will see $300 go on groceries, $200 for phone bills and $100 on entertainment.

Money is literally getting allocated everywhere with no real thought or intent.

Afterwards people feel great because they finally have a budget. But guess what. It fucking sucks.

What most people fail to do and what most other financial experts don’t promote is the fact that your budget needs to have a purpose.

So, every budget starts with a purpose. You need to ask ‘Why are you budgeting in the first place? Are you just doing it for the sake of doing it? Do you just want to track your money?  

Why? Why are you tracking your money? Why are you trying to save money? Why are you trying to earn more? Come up with a concrete purpose and that’s going to guide your budget on where you should go.

For example, your budget purpose is to take a freakin’ awesome holiday to Hawaii. You’re taking your family and it’s going to cost you $10,000. Awesome.

Now you can have a look at your budget and make changes. If you’ve seen my other content, there’s two ways to improve a budget.

Number one, you earn more money. Number two, you decrease your expenses. So let’s say you have a goal of $10,000 and you want to save that up over a 12 month period.

So, $10,000 divided by 52 works out that you’re saving around $200 per week. How can you save, or how can you earn an additional $200 per week to hit your target of $10,000?

What I suggest is to look at expenses first and only spend about 10% of your time there because from a psychological point of view, cutting expenses can be difficult to maintain.

Smart Budgeting

So $200 is your target. Start by looking at tiny little things like phone bills. Where can you get a deal? Where can you ring someone up and say,

“You know what, I’ve been a customer for a while, give me a much better deal.” You might be able to do that, and you might be surprised.

Look at your mobile phone, your internet, your entertainment. If you’ve got pay TV, your credit card fees, anything like that you might be able to save $80 per month straight up by bundling or asking for a better rate.

Increase Your Income

Your other option is to increase your income. You can do a bit more of the side hustle you might be able to do things on sites like Air Tasker, or Upwork, or freelance work knowing that you’re contributing to your overall purpose.

Now, to really get on top of your money you will need to identify your spending personality. There are three categories.

 The first one is called, “Keeping up with the Kardashians.” Those are the guys that want that fucking awesome lifestyle.

They want the mansion, they want the car, they want to live by the beach and they want the beach house. They want to rock Armani everywhere. if that’s you. If that’s you then you’re going to have to get a really high paying job.

The second one, and this is where I fit into, it’s called “Soul Feeder”. It’s one, maybe two things that you like doing, costs some money but you just really love doing that.

Find out what that is and then you’ll be able to make cuts across the rest of your budget a lot easier. The way that I compare that to something most people understand is a cheat meal.

So, if you’re dieting, dieting, dieting and you have that cheat meal that cheat meals going to keep you insane an going to keep you motivated to achieve your goals.

The same thing is for the Soul Feeder. Find out what it is that might be having a really nice car. It might be living in a nice neighbourhood.

It might be just taking weekends away. It might be having coffee, or going to the cinemas. Whatever it is, find out what that is so you can allocate money to that.

Then whatever areas are in your life you can start to make the cuts from there because you don’t care about that as much.

The third one is the best category for building wealth. These are people that are Thrifty. They’re the guys that get off from saving money.

They’re frugal, they’re savvy, they’re so wanting to save money that, that fuels their soul. So, if you’re that person that’s going to be a lot easier because you can save more and can also earn more as well.

So that’s where I differ to a lot of other financial guys. They’ll just say, “Stop buying lattes. Stop spending money on lunches and that.”

I believe that you’ve got to build wealth and live at the same time. So find out what that living part is for you. What gets you excited, and what do you like doing? Find that one, maybe two things and then cut the rest of your budget.

 

 

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