The world of personal finance can often seem almost infinitely complicated, and it’s hardly surprising that so many ordinary people are scared away from even seeking out financial advice to begin with.
Yet for all the intricate financial details that you might care to learn about over time, getting started with a budget doesn’t have to be a complicated, stressful matter.
In fact, if you find that the very idea of creating a budget is getting you down, one of the best things to do is to simplify the process. Here’s how.
Plan with what you’ve got, not what you expect
Life has a way of being tricky and throwing unexpected surprises our way. One reason why many budgets go astray and end up causing people grief and stress, is because they’re the result of “expectation” rather than “reality” planning.
If you budget a month ahead using your expected income for that month, and have every penny accounted for, what happens if, for some reason, next month’s income isn’t what you expected? Or a surprise expense takes a chunk out of that amount?
The answer is simple; your budget falls apart.
Simplify and work around this by only budgeting with what you actually have. You can have a sense of where you’d like to spend your next paycheck, but wait until the money’s in your account before deciding what to do with it.
Plan going forward, not looking backwards
By definition, a budget is meant to be something that helps us to plan what to do with our money going forward. This makes good sense — after all, we all live in the present and have to plan for the future.
For many people, however, a budget is used more like a self-punishment device based around feeling bad about past spending. This is especially true if you frequently ignore your budgets, or waste your time organising your past expenses by category.
Forget about these self-shaming exercises. What happened last month is done. Focus on what to do with the money in your account right now, and stick to your plan.
Budget for fun stuff too
Often, budgets are only used to plan for “serious”, “grown-up” expenses — like bills, rent, school fees, and all the rest.
Some people even feel guilty about setting aside a category on their budget for “fun” or “films” because they feel that doing so is a waste of their hard-earned money.
Get that idea out of your head, and start allocating some of your funds specifically for “fun” activities. Not only are these kinds of pastimes essential for enjoying life, you’ll probably end up doing them anyway, even if you don’t budget for them. This way, you’re at least keeping yourself honest and your budget accurate.
Don’t be afraid to adjust
A great thing to remember is that a budget is never set in stone. You should never be afraid to adjust your budget as your external circumstances change.
If, for example, you’ve over-budgeted for groceries but under-budgeted for something else, feel free to cross out your grocery budget, fill in a lower number, and move the newly freed-up funds to the other category.
There’s nothing wrong with moving funds around — just so long as you don’t budget or spend more than you have.