No matter who you are and what you do, budgeting can be one of the most useful tools for achieving your financial goals. The best thing about budgeting – anyone can do it! Join us this week for some budgeting tips and how you can get started:
A common trait and a natural one to understand is the desire for instant gratification but it is far more beneficial to become attuned to delayed gratification. Budgeting is a perfect example of delayed gratification, exercising discipline and chipping away in the pursuit of an end goal. Host Andrew Baxter recalls a particular psychological study which looked to compare the outcomes of children willing to exercise discipline for delayed gratification and those who were not and the findings suggested those that do accommodate delayed gratification had greater health outcomes as well as financial outcomes. Budgeting is one way we can work towards delayed gratification and certainly something you can benefit from.
Spending Less Than You Earn
Among younger people, there is a sense of social pressure to live the high life as seen all across social media. Unfortunately, not everyone is equipped to spend copious amounts of money as most people simply do not earn that much. Host Andrew Baxter notes that although there is that social pressure, it is beneficial not to succumb and to work to spend less where you can. The cost of living increase over the last couple of years in particular has made it more difficult to budget and save but that is all the more reason to start using budgeting to your advantage. Eventually, if you budget well and manage to save plenty of money over time, you may put yourself in a position to enjoy some of the finer things in life a bit later and without the stress.
A vital part of any budget is record keeping in order to know where you’re at. For many, looking at what you’ve spent in a week versus what you’ve earned can be painful but there are things you can do to make it a bit easier. Host Andrew Baxter suggests categorising expenses as far as fixed compared to variable costs as well as essential compared to discretionary. Essential expenses are things like mortgages or rent that simply need to be paid off where discretionary may be breakfast at a cafe or any other kind of avoidable expense that is not essential. Some banks now even offer reporting for where your money was spent and knowing this information is the first step to be able to target your savings to certain areas to avoid pain down the line.
Some Tips to Get Started
Like anything, the most important step is the first one and in this case that is simply sitting down with a spreadsheet template ready for you to fill out. Host Andrew Baxter notes that being honest with yourself is the most important part of any budget. There is no point taking the time sitting down and making your budget if you are just going to let the odd $50 go by without taking note of it in your budget and track record. Another way to ensure you stick to your budgeting goals is to allow for a bit of colour here and there like setting aside those few dollars for that hobby of yours or something so that your budget doesn’t feel like a really harsh restriction but simply a limit on your spending. As long as you budget for it and do not go overboard it is okay and you may find yourself in a position where you have not spent that full amount and can then put that towards your savings and you eventually find yourself making progress.