For many people creating a budget can be a huge undertaking, and simply getting started is the most common roadblock. Why? Because established patterns of behavior can be hard to change. With that said, if an established pattern has become problematic – as is the case with the financial habits of many – it needs to be changed.
To make change happen let’s focus on how tracking expenses can help break bad spending habits and create a working budget.
1. Keep a spending journal
Carry a pocket moleskin notebook (or any dollar store mini-notebook) in your pocket or purse to record and categorize every financial transaction you make. This may sound annoying or cumbersome at first, but it’s easy to implement and will play a huge role in getting a handle on where your money is going… so if you’re having problems, start doing it.
In your journal simply record 3 items for each transaction:
- record the date – so you know when each transaction took place and how many you tend to make each day.
- record the amount – so you know how much you’re spending.
- record the category – so you can determine how much money to attribute to each budget category each month.
Remember to take ownership of this journal by using my suggestions as a starting point and adapting it to fit your needs. Also remember that your categories are alive; they can be created, deleted, and changed to better fit and accommodate changes in your life.
2. Buy simple budgeting software
I’ve always scratched my head at people who don’t want to spend $60 on a budgeting program that will likely help them save hundreds each month, but they have no problem dropping $60 on going out to dinner every Friday night! I encourage you to stop making excuses for not buying a budgeting program and just go buy one; it could easily be the best $60 you spend this year! I recommend – and personally use – You Need A Budget (YNAB) for both my business and personal finances, and I love it.
If you’re worried about the $60 then simply forgo dining out a time or two this week to reclaim the cost. If you’re not willing to make that sacrifice then you might as well quit reading now and go shopping.
3. Be disciplined and follow through
You can start your journal, purchase the budgeting software, and feel good about getting started… but if you don’t follow through and make this behavior a habit you will not be successful. Remember that established behavior patterns are hard to change, but not impossible to change! Making the switch to wondering where your money went to telling your money where to go will take time, discipline, and follow through. Are you up for the challenge?
It’s time to change the course of your life. It’s time to grab your finances by the throat and take control back.
You can do this… all you have to do is get started!