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Budgeting = FREEDOM

Posted on June 25, 2010

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So I am new here at Buck the Norm, and you guys might just think I’m crazy but hang with me for a minute.

I’m convinced that budgeting is actually one of the more freeing things in life.

Why, you ask? Here’s why: It allows you to be in control of your hard-earned money instead of your money being in control of you. Sure, it might sting a little at first but once you start to see the results you will be more than happy you took it on. I definitely am!

With a budget, next time you get a paycheck you will have a game plan all laid out on exactly where that money is going to go. Instead of just cashing your check and spending it without thinking and then having a bill come in the mail you don’t have enough to pay for, you will be able to sleep (and live!) peacefully and confidently knowing that all your basis are taken care of.

We have our Budgeting 101 article you can check out to help you get started, but I wanted to point out a few important things here as well. (Remember that a budget doesn’t have to be one certain one way but it should be a way that works for you. I suggest creating a monthly budget and then breaking it down into each pay period.)

1. Pay yourself first! Sound crazy? It is! It’s bucking the norm! The first thing you need to budget for is your savings account. This is an account with cash in it that has your name on it. It belongs to you and no one else. It can be a savings account for emergencies, vacation, a new TV or even more importantly retirement or all of the above. But its money that you are paying yourself before you pay your bills or go out to eat. This can either be a certain percentage of your check or just a flat amount you want to put in out of every paycheck. (If you don’t have an emergency fund built up yet start on that! You’ll be prepared to buy a new tire if yours blows out as well as ready to pay for other emergencies without going into debt.)

2. Budget the bills in! Of course, responsible individuals not only pay themselves but they pay their bills too! When creating your budget, after you have budgeted in how much you will be saving go ahead and budget in any and all bills that you have in a monthly basis.

3. Budget necessary spending! After you have set aside for both savings and bills what is left is money you get to spend! But of course there is a difference between spending on what is necessary (groceries, gas, insurance, etc.) and what is not necessary (the movies!) So make sure that you have budgeted for the things you know you will need to spend money on for the month.

4. Finally, the rest is yours! The rest of your paycheck is yours! You can spend it on a night out with your friends or giving to charity or even adding [more] to your savings! (Can you tell I really love the whole savings thing??)

Of course laying out a budget is different than actually sticking with it throughout the month. So what’s the key? Track your spending as you go. You can do this manually (and make it easy on yourself by using your financial institution’s online system to watch where you’re money is going) or there are different resources like the computer software Quicken or Microsoft Money. What I’ve been using lately and has been very helpful is Mint.com. will automatically track and categorize your spending for you!

Like I said, there isn’t one single, right way to do your budget but the important thing is that you have one, and that it works for you. Play around with it, make adjustments as needed for a few months and then smile knowing you’re on your way to freedom.

Do you have a budget? Share your experience: How easy or hard was it to create one and stick with it?