July 8, 2013
Is a Life of Budgeting in your Future?
Source: Like many, Victor Illian came to the conclusion that setting and following a budget was the best path to a better future. It didn’t take him long to realize he had made the right decision.
There are two types of people:
- Those who see budgeting as a good thing
- Those who hear the word “budget” and immediately run and hide
Which group do you fit into? Although you may not have a budget in place at the present time, it is never too late to make this move. It may be a big change to your finances, but in the long run it will improve your overall situation.
It is hard for some to imagine a future in which they have to adhere to a budget. Right now, these people spend money when they want and deal with everything else later.
Everybody is entitled to make their own financial decisions, however, implementing a budget is never a bad thing.
Getting Started with Budgeting
It doesn’t matter how old you are. It doesn’t matter how much money you have. It doesn’t matter what short and long term goals you have set. If you have the right mindset, you can get started with budgeting without any delay.
Does this sound like an impossible feat? Rather than look at this as something you will never be able to overcome, break it down into smaller steps that can be completed one at a time. For example:
- Mark down your income
- Make note of the total cost of your expenses
- Determine the difference
- Make necessary adjustments
- Set goals (saving for a home, retirement, etc.)
Still scared? In this case, it is time to hear from somebody who has “been there, done that.” Here are the questions I asked Illian, along with his detailed answers:
1. What led you to a life of budgeting when so many others overlook the importance?
Years ago my wife and I found ourselves in debt to multiple credit cards and both our student loans and had just added our first house mortgage. I had gotten a good paying job at the time but we both felt we didn’t have nearly enough money to cover everything. I have looked for ways to increase my income but I knew I only have some much time I can trade for money so we started looking close at our what we were doing with our money and decided to make paying off our credit cards our first priority when I got my paycheck each time. With some information from Dave Ramsey we used his snowball approach and paid off the smallest balances first to feel the ‘wins’ and increase momentum and motivation. Eventually we paid off all the credit card debt, paid off her college loan and will have mine paid off in a few more months.
2. How has your approach to budgeting changed over the years?
The further we progressed we further developed our budgeting approach. We started with a paper system with ledger sheets using a modified envelope system. We then moved upward to a robust Excel document we enhanced and tailored over the years to meet our needs. This has provided us better focus on how much we intend to spend each month in categories and it gives us clear indicators when we go out of that amount so we can decide if it is justified or not. I plan to further develop this system into a computer program to assist others with what we have found works for us.
3. If you could lend one bit of advice to others, regarding budgeting, what would it be?
Don’t put it off. That is probably the biggest advice I can think to give someone. Start right now! Even if you don’t know the best way to do it just start something and commit to work the process and improve it as you learn more both from your own trial and error and from others that have been through it.
Sometimes all it takes is seeing somebody else achieve similar goals to get moving in the right direction. Hopefully the answers provided by Illian will give you the motivation necessary to push forward and change your life with the help of a budget.