Tuesday, 26 January 2016

How to stick to your budget

How to Stick to Budget.png


1. Know exactly all of your expenses.

List all of your expenses - write all of them down to the specific and exact details. Know exactly the following detail about your expenses:

i). What are they?

Gas bill, electricity bill, water bill,  hot water bill, food or grocery bill, home phone & internet bill,  mobile phone bill, private health insurance bill, public transport tickets, fuel costs, car insurance bill, home insurance bills (building & content insurance, or renter's insurance), rent or mortgage payment, council rates, body corporate rates, socialising and  entertainment expenses, etc.

ii). Know when are they due, to the exact date or if not possible, to the exact period.

For example, I know exactly that my mobile phone will be due on every 25th of the month, my private health insurance will be due on exactly every 1st of the month. For my annual home insurance bill, annual car registration cost and annual landlord's insurance bills, I know that they will be due exactly every December. So I know, in December I need to have $xxxx for car rego & those insurance expenses.

iii). Know exactly how much exactly is payable or if not possible, estimate to the closest dollars.

It is difficult to estimate exact dollar amount for the next utilities  (gas, electricity, water and hot water). But if everything stays the same  (same weather, same number of people using electrictricity/gas/water/hot water, with similar consumption pattern) you can estimate your next utility bill to a high degree. The rest of the bills,  such as food, socialising/entertainment and mobile phone expenses, should stay the same from month to month.


2. Put the expense list on calendar

I put my expense list in my calendar - a monthly calendar.

I created a financial calendar with green tab (green colour like the colour of the U$ dollar) set it with monthly view.

This way, in a glance I know exactly what expenses are payable now and also in the future (short term, medium term and long term).


In my calendar, I repeat/recur recurring expenses on its due date (or just before it's due date).


By doing the steps above, on budgeting day (normally on payday), I only spent a glance (a very quick look on my calendar) and I know exactly what expenses I need to pay in the period.


The purpose of listing the expenses & putting the list on a monthly financial calendar:

1). If u miss a bill, your current saving budget will be skewed. Because this means you might need to fork out extra $$ from your saving. This means less saving than budgeted (aka planned).

2). And if you don't have enough savings, you might need to wait until your next paycheck  (salary and/or client'side payments) to pay for the bill. And by doing this you might incur a late payment fee - that means even more less money saved than budgeted (or planned).

Psychological purposes of writing and listing budget down:

3). A high percentage of those who have written goals and to do list, nailed their goals (achieved their goals).

4). By writing down your goals (budgeted expenses, in this case) you know what you need to do (to achieve your goal which is to stick to the budget).

Writing down goal (or budget in this case) is like following a road map that is proven to be the most efficient and effective way to get you to your destination.

5). Writing goal (budget) is effectively helping your brain to subconsciously break down the steps to achieve the end goal.

This is the part that actually makes you nail (achieve) your goal (stick to your budget).


3. Make a decision

Make a decision that you will stick to your budget - a resolute decision that you won't undo.

Simply make a decision in your mind (a resolute decision) and the rest of you will automatically follow your mind's decision.


4. Make sure everything in your life support your decision

If your dependents  (wife, children or parents) want to live lavishly.

And you suddenly decided not to (live lavishly and want to stick to your budget to save money), you are more likely than not, not able to stick to your budget.

If you feel envious and always want to keep up with the Joneses, you are more likely than not, not to be able to stick to your budget.

Everything in you and your life must support your decision.


5. Discipline

Know what you must do to achieve your goal, at the time you must do it and do it well, regardless of the challenges.

I know that I can only spend $50 per week on entertainment, so I will stop paying for entertainment once I spent $50 in a particular week.


6. Discipline alone won't cut it, your burning desire will

You must know your extreme deep innate driver that makes you want to achieve your goal - Your burning desire.

At the time of facing difficult challenges, the only thing that will keep you going (that is, to stick to your budget) is your burning desire.

What is your burning desire?

To accumulate enough $ so that you won't have to put up with office politics (aka early retirement).

To accumulate enough $$ so that you can provide a good living for your parents, wife, or children.


This burning desire makes you stick to your budget.

When you are facing very difficult challenges, your burning desire is the one that makes you stick to your budget. You won't go out of budget if you know that you must save $xxxx amount per week in order to provide for your loved ones, or in order to have retirement.

©™ Kaizen Money Smartt



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