Budget. It’s amazing how one simple word can elicit so many strong feelings. Bondage, boredom, failure. Restrictive, tedious, controlling. A lot of people only have negative connotations when they think of budgeting, because of what they have heard and experienced.
If you think of a budget as an 8 ½ x 11 (or digital) jail cell, I’m sorry. You’ve been mistaught and abused. It’s not supposed to be that way.
What A Budget Is Supposed To Be
A budget is simply a tool to help you accomplish a goal, like a hammer or a pair of pants. Sure, you could smash your finger with that hammer, but it’s not the hammer’s fault, it’s user error. And if you pick the wrong pants size and can’t zip them up, there’s nothing wrong with the pants. You just picked the wrong pair for you.
A budget is a document that tells you where your money comes from and goes to and makes it easier to recognize and adjust your money habits. It should be personalized to your unique situation and never written in stone. Life is highly variable, and your budget will change accordingly.
Trying to budget any other way will feel like being in jail. Like you’ve been trying to wear pants half your size. Making an appropriate, personal budget will be like getting pants tailored to your individual body. It will be empowering, not restrictive.
So, how do you actually make this kind of budget?
How To Make A Budget
Step 1: Track Your Spending
Right now, you probably have no clue how much you spend on things. That’s ok, that’s normal. When writing a budget for the first time, a lot of people pick random numbers or percentages they find online and try to squeeze their lifestyle into them. I’m sorry, but that’s just not going to work. That’s what leads people to see budgets as jails.
Before even starting your budget, you need to track your spending for a couple of months. If you do most things electronically, you can simply review several months’ worth of bank or credit card statements to get an idea of what you’re doing with your money.
Step 2: Write A Budget Based On Your Current Lifestyle
Once you have an idea of what you spend, write it down. Make sure you include all of your spending and income.
Most people’s budgets cover one month because a lot of bills and paychecks are monthly. However, you can pick whatever time span works best for you. Some people do bi-weekly because that’s when they get paid.
Break your spending down into categories. Common categories are rent/mortgage, tithe, gas, etc. This is your budget, though, so you get to decide what categories to use. I hear unnecessary complaints about budgets being too abstract or detailed. This is your budget, you break it down how it makes the most sense for you. As long as all of your money is accounted for, it doesn’t matter how you label it.
Step 3: Do A Reality Check
Now it’s time to look in the mirror without rose-colored glasses. This is where a lot of people simply throw their budgets away. They just aren’t willing to face the facts and be honest with themselves.
Usually, when you first start tracking your spending you discover things that you aren’t really proud of. Like how much you spend at Starbucks. Or how little you give to the church.
Remember, “all have sinned and fall short of the glory of God.” (Romans 3:23) No one is perfect. There isn’t even one perfect way to spend money. It doesn’t matter what other people would say because they’re never going to see it. This is your personal money management tool, not something that you’re going to post on Facebook.
By this point, you have a budget. You have all of your income and spending written down. But do you want to stop here?
Step 4: Compare Your Current Budget With Long-Term Goals And Priorities
Now that you’ve admitted to yourself that $50 a month goes towards hair care products, it’s time to do a little soul searching. Let’s see how your spending patterns fit into your life as a whole.
What are your long-term goals and priorities? What do you value most in life? When you look at your current budget, does it look like you’re on track to get where you want to go? Do your spending habits reflect your stated values?
Here you have to be even more honest with yourself than in Step 3. You may find that what you say matters to you isn’t what really matters deep in your heart. You may be saying “the right things,” but your heart just isn’t feeling it.
Or you may find that you were completely unaware of what you were doing and how you were sabotaging your future goals and dreams. You may have never drawn a connection between some of the things you were doing and how they affected your ability to do things that matter much more to you.
Again, there is no right or wrong answer. We all have different goals, values, and priorities, and there’s nothing wrong with that. The important thing is to recognize them and compare them with your current lifestyle.
Step 5: Adjust Your Behavior And Budget
If your current budget doesn’t have you on the path to where you want to go, you need to make some changes. This is where your budget can really serve as a GPS that will guide you to your goals.
However, a GPS only works properly if you actually follow its direction. Otherwise, it’s like a broken record constantly recalculating while you get yourself lost. I put behavior first in the title of this step because that is what has to happen first. Just changing some numbers around in a document isn’t going to make any difference if you’re not actually going to make the changes in your lifestyle.
Just like a map, grocery list, or class roster, a budget is simply a tool that we create for ourselves to help keep us on track. If you’ve never had a helpful, personalized budget, I dare you to try one. The sense of peace and empowerment that comes from knowing what’s going on in your finances is irreplaceable.