Budgeting, saving, investing, and retirement planning are big subjects. You can (and should!) spend a lifetime trying to master each piece of the financial puzzle.
These topics are complicated, but they do have one thing in common: self-discipline. Self-discipline is the thread that weaves through all successful financial plans. You have to say NO to short-term wants if you will ever build and sustain a high net worth. It doesn’t matter how much you earn if you spend it all. This applies whether you’re currently working for minimum wage, enjoying a steady monthly salary, or raking in huge commission checks. Self-discipline is essential for those who want to stop living paycheck-to-paycheck and start building a future.
Start With a Budget
Where to start? Many people use the tried-and-true method of a line-item spreadsheet. A maximum allowable expense is set for each item. When the time period ends, actual expenses are entered to determine if the household is under/over/on budget for the item. Spreadsheets are tools and they don’t have to be pretty. They can be simple, just showing the high-level categories, or they can include more detailed subcategories. The important part is what happens during and after budgeting. The calculation, contemplation, and discussion of each item will help to illuminate each expense and will empower you to control costs.
If you want some help in setting up your budget, consider a software program or app to get started. Here are some examples of popular budgeting programs:
Quicken –Quicken was created by Intuit decades ago and eventually spun-off into its own company. Quicken still offers desktop software but now has an app that helps users manage their finances from a mobile device. Quicken offers a range of financial management tools for individuals, families, and small businesses.
Ramsey+ - Dave Ramsey is synonymous with financial self-help. A guru of modern times, Ramsey is a public speaker and podcaster who advises everyday people on getting out of debt and building wealth. His program, Ramsey+, comes with a budgeting tool and offers financial encouragement and education.
Mint – Mint is an app created by the makers of Quicken. It’s free to begin and a good way to assemble a budget if you’re not a fan of spreadsheets. Users must create an account with Intuit to get started.
American Consumer Credit Counseling (not software) – The ACCC agency, located in Chicago, is a nonprofit that seeks to improve the financial situation of those seeking its services. Their website offers many free resources including online worksheets to help consumers start budgeting.
Stay the Course
Stay strong and stay disciplined. It won’t be easy. If people think you have money in the bank, they will probably think of ways for you to spend it. If you’re currently transitioning to a more stable financial plan, it helps to surround yourself with like-minded individuals. The savers are out there, hiding in plain sight. They don’t lease new cars and they often appear counter-cultural (wearing out-of-style clothing and cooking dinner at home). The climb to financial stability can be difficult, especially when our society values “fitting in” over getting ahead. Resist the short-term enjoyment of spending to impress. Your future depends on your delayed gratification today. Living paycheck-to-paycheck is a vicious cycle that you can break. It all starts with discipline and a budget.
Recommended Reading and Podcasts
- The Richest Man in Babylon by George S. Clason
- The Millionaire Next Door by Thomas J. Stanley and William D. Danko
- Everyday Millionaires by Chris Hogan
- The Motley Fool podcast
- The Dave Ramsey Show podcast