The Cornerstone of Winning with Money

"Suppose one of you wants to build a tower. Will he not first sit down and estimate the cost to see if he has enough money to complete it?  For if he lays the foundation and is not able to finish it, everyone who sees it will ridicule him, saying, 'This fellow began to build and was not able to finish.'    Luke 14:28-30

If there is one thing that will destroy your ability to win in your financial life, it is lack of planning.  You need a plan.

No, I'm not talking about some complicated financial plan that you need to hire a CPA and Estate Planning Attorney to decode for you.  I'm talking about a simple Spending Plan...the dreaded BUDGET! (If I could play a dramatic sound right now, I would).  

People blow the idea of a budget WAY out of proportion.  When I'm leading Financial Peace University, I get statements like, "straitjacket feeling" or "I'll never get to have fun."  The truth is, a budget is no more than telling your money what to do BEFORE you spend it (aka Spending Plan).  This is PERSONAL FINANCE.  If you want to spend some money on (enter your favorite thing here), put it in your budget.  It's that simple.  But remember, you can't spend more money in the lines of the budget than you have.  I've been doing a budget every month since 2006.  At first it was a little strange, giving each dollar a mission.  But if you think I'd go back to "managing" my money based off what the balance in my bank account said minus the in-my-head math of everything that still needed to be paid...You're CRAZY.

It's also not just about creating a budget, but living by that budget.  By making the budget, you've given yourself out-of-bounds markers.  Now, you have to track your progress based on those lines and adjust if necessary.  The best program I've found for this is You Need A Budget (YNAB for short).  This program allows you to set up your budget from your computer, enter transactions on the go and check your progress on the go.  

If you're out shopping and find a pair of shoes you want for $100, you can pull out your phone and see what you've budgeted for clothes before making the purchase.  If you budgeted enough...GREAT, enjoy the new shoes.  If you didn't allocate enough money for those shoes, you have a choice to make.  You can wait until you budget again and add more to that category or you can choose to move money from another category to make up the difference.  The budget is not to restrict you, but to help you make informed decisions...unless you desperately need restriction!

There are VERY few people who can out earn stupid money decisions that are placed in front of each of us on a daily basis and live with no plan at all.  As for the rest of us, it takes intentional planning.  Some of those stupid decisions are easier than others to turn away from.  Some are HARD to resist.  The hard ones are different for each of us, but a budget can help you make informed decisions instead of wondering what happened to all that money you made last year.