Does the idea of a budget of budgeting seem so unappealing , unattainable, or too complex? That may be because you are looking at it wrong or maybe just overthinking it.
What it is not: it is not saving, it is not tracking, it is not monitoring. It is in fact a method for allocation of resources; specifically, allocation of your income.
Essentially, budgeting is assigning or telling your money where you want it to go and what you want to use portions of it for. Simple, really, it is as simple as that. I invite you to be a child again, for this moment, forget all the apps, spreadsheets, courses, etc.
Our grandparents, who we assume are not as sophisticated as we are, used this very simple idea: when they got paid at the end of the month, they brought the money home in an envelope, sat with their spouse and said what do we need money for this month…
After listing all the categories they needed to spend money on, they then began to distribute the money in the envelope based on the categories listed. The amount they distributed would have been based either on the previous spending pattern.
Once the money was distributed, the envelope will usually be empty; they matched on into the month with the amount they have distributed for each category and if the grocery ‘allowance’ was all spent by the 15th of the month, the family eat whatever was available in the house until the next income arrived at the end of the month.
Simply put:
- You earn money
- You identify what you need money for in the period
- You distribute the money to each category you identified in step 2
- You spend throughout the month based on the money you have assigned to each category.
It is as simple as that, it really is.
I know you have thoughts on all the other aspects, how do i know exactly how much I am spending, how do you know all the categories that you will need to spend on, etc. You don’t know what you don’t know. Start from what you know and build from there. I challenge you to take a look at your monthly earnings (monthly, because it is just simpler) and go through the simple 4 step process above, and come back to share your thoughts.
Product: Budget template