Setting a budget is one of the key parts of being an adult, yet so many people don’t know how to budget. It seems like most people work, spend, and pray. Those who are struggling patch the holes as best they can with debt. I don’t think that’s good, and that’s why I wrote an article on how people can go out figuring both aspirational and current bets, along with how they can transform their lives as a result.
Know how much other people in your country have and are making
Figuring this out can be quite challenging. Data on income and wealth isn’t easily available, and it’s often badly collected. You need to do your best to research how much people around you are making. It’s really, really important that you know, so that you know what is realistic along with which social class you’re likely to find yourself in, provided you achieve your budgetary goals. You’ll also know where you stand today.
Know how much you need to be happy
Add up every single thing you could end up buying in a month and figure out what you would spend ideally. Every last thing. Write it down, and make sure you’ve factored in everything. If you can’t do this by hand, search “budget calculator”, followed by your country. This way you can get help doing it from a software. Most of these websites make it simple and walk you through the process. When you’re done with the questions there you go.
Figure out how realistic you are
Some people are very down to earth, some people are delusional. It’s ok if your budget is aspirational but try to be realistic. You shouldn’t be flying on private jets or eating gold-plated chocolate. Knowing how realistic you are will let you know whether or not you need to change.
Figure out which addictions you can cut out of your life
If you’re doing drugs or alcohol, just stop. These things will kill you, and they’ll steal all of your money. They can be useful when you’re working, but they aren’t good for you. Over the long term, you’ll lose money and reinforce delusion. All addictions are like this. If you’re able to get out them, make sure to do so. It’ll make sticking to your budget easier.
Get your dating life under control
This is another thing that’s important to do before you adopt your new budget. If you don’t have a solid grasp on dating, you’re likely to lose all of your money. This applies to both men and women. Loneliness makes people crazy. Crazy people go broke fast, for a variety of reasons.
Make sure you’ve actually factored in everything and redo your budget
This is really important. Make sure your budget is accurate. Have you thought about health insurance? Life insurance? Emergencies? Taxes? As I mentioned this is a very big expense. Make sure you have everything you need written down and redo your ideal budget.
Figure out how close to your current reality your budget is
Your current reality is not going to fit your ideal budget if you’re young and highly ambitious. But if you’re already making enough money to live your ideal life, then that’s great. But regardless, look for any differences. If they’re big, at least now you know how much work you have to do.
Make today’s budget
Try to get as much as you can from your ideal budget to conform to your actual take home pay. Make sure to factor in all the important things and do your best to prioritize them. You want to be as responsible as you can. When you’re done, you have your new budget. It may not be enough to live a great life on, but at least you know how much it is, and you can begin making adjustments according to your living situation.
Start living up to your new habits
To get to your ideal budget, you’re going to need to change your life. It’s going to take a lot of work to succeed, and the best time to start is now. Start doing what it takes to stay within you budget today, and begin saving, planning, and working towards your future goals. You would be astounded by how much progress you can make if you just hop to it.
Cut off friends and avoid situations that cause you to overspend
This can be kind of tough, but it’s worth it in the long run. It’s hard to cut friends off, I’ve been there. But you want to be around people who are cultivating good habits. Your 60-year-old self will thank you in the long run.
Make sure you’ve factored in retirement savings and your country’s pension plan
This is why being a digital nomad doesn’t really work. It’s inconsequential at the lower levels, but you’re going to want to have peace of mind as you age. You get this peace of mind by contributing to your country’s pension plan. Make sure you’ve factored in retirement savings.
Figure out how you can pay off debt
Hopefully you factored in your debt payments too! Either way, clearing up your debt will simplify your budget a lot. It’s a great way to avoid giving free money to the bank and will simplify the (literal) clutter of your balance sheet.
Keep track of changing prices
If you’re at the higher levels it doesn’t matter. But if you’re young and poor you’re going to want to keep track of changing prices so that you can update your budget. If you keep track of the news along with industry publications, you should also be able to make solid career decisions.
Setting a budget isn’t easy, and I’m neither an accountant nor a health coach. I don’t have any in-depth knowledge or special skills. But I do know that precision and accuracy are very important in budgeting. Once you map things out, things get a lot easier. Then, it’s up to you to stick to the budget you’ve made for yourself. Simple but not easy, like most things on this blog. Simplifying the process of making a budget makes it less daunting though, I think. Hopefully this article helped you start keeping track of your finances.
Thanks for paying attention.
