31 Days of Finding Freedom in Simplicity - Budgeting

When we talked about financial freedom I didn’t want to get too far into the how.  Are you able to think about a time when you are debt free, and you are able to live the life you want?  It is hard to get there.  It took Matt and me a long time to figure out what that might look like for us.  We have slogged for a very long time trying to get out of debt.

Why is it so hard?  Because you have to make the choice to live below your means, no matter what your family, friends, neighbors, or Facebook friends think about it, and no matter what they are doing themselves.

There is such a fear of missing out (FOMO) in our culture.  It can be anything from seeing new cars, to new homes, to vacations, or new clothes.  The grass always seems to be greener for that other person, and you envy them that they have something you want.

The trouble with the fear of missing out is that you most likely do not know the whole story of that other person.  They could be having a hard time making ends meet, or they may really have it all together, but could have issues in other areas where your family is completely centered.

When you dream and plan goals about what your life will be like, what you want your life to be like, finances need to be a part of that dream.  You need to be able to look at your dreams and goals, and accurately measure how they are going to come to fruition. 

One of the easiest ways to accomplish this is to budget.

I know that budget is a dirty word, and not fun and flashy at all.  But, it is necessary to live a life of simplicity.

I am a bit of a nerd, so I love spreadsheets and making numbers do exactly what I want them to do, but I know there are a lot of people who just don’t like to deal with it.  Perhaps you think it is too difficult, or there are too many bills and you figure, what is the point?  I have been there, when there is too much month left and the money is already gone.  It isn’t a fun place to be, but that doesn’t mean that you can’t be proactive.

The easiest way to budget is to do a zero-based budget.

What this means is that you take the amount of income you expect you will receive over the next month, and then, after you have that total, you write down exactly what you are going to spend in the month.

This includes everything from bills to debt payments, savings and giving to charity.  Every dollar has a purpose.  If you do not actively write out what that purpose is, your money will find some other way to leave you – and that is usually through Amazon Prime or Target!

In a very simple and with completely unrealistic numbers here is an example –

You will make $1000 this month.  Your living expenses (rent/utilities/food) come to $500.  You have debt payments of $250 this month, and you have $250 that you put towards savings this month.  Your income and expenses equal zero.

You may have a hard time wrapping your head around this zero based budgeting, especially if you feel like you don’t make enough money each month to get by.  It is completely possible that you have an income problem, but that doesn’t mean that you cannot budget.  You are still in control of the dollars that are coming into your home each month, and you get to decide where to put them.

If you find that you don’t have enough money, the first thing you need to do is look at your expenses.  Are there things that you could cut out this month?  It doesn’t need to be forever, but it might need to be for right now.  Areas that seem to come up for me are extra trips to Target, buying coffee out, cable, subscription services (like Netflix and Hulu).  These are areas that you can cut out if you need to, even if it isn’t the most exciting thing to do.

You may come to a point where you see that you have a lot more excess money than you thought, but because you weren’t being intentional about where that money was going, it was flying out of your wallet faster than you knew. 

The key is to be intentional about your spending.  Make sure that you are looking at every purchase with a judgmental eye.  Is this purchase necessary?  If it isn’t necessary, is it something that you really need, or is it more of a want?  Remember our discussion on de-owning, and really make certain it is an item you want to bring into your home.

I don’t know how many times I go through the Target dollar spot (or is it the $5 spot now?!), and buy a couple items for my kids as a special treat.  Sometimes those items are consumable like a coloring book, or sometimes it is something they can use for school, but often it is something that ends up broken on their bedroom floor.  But, those little expenses add up, and are those items really necessary?

Budgeting is not the bad guy in this scenario.  In fact it actually gives you freedom and permission to spend money.  When you put money in your budget for clothes, you can easily take that money when you are out and about, and feel free to purchase clothes that you find.  When you give each and every dollar a name, it gives you the freedom to make purchases without feeling guilty, and without wondering whether you really ought to purchase that specific item.

Do you budget each month?  Do you feel like it will give you freedom if you tell your money where it should go?

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