Budgeting Personal Finances Without Losing Your Mind!
When budgeting personal finances I recommend keeping it as simple as possible. "Why? I only do this when I have to! Why not do it all at once no matter how messy it gets?"
Well, because you want to make sure you'll want to manage personal finances in the future too!
You see, managing your finances is not about cutting back on things like some dreadful financial diet (yikes!)
It's more about keeping track of where you are financially and knowing where your money is going.
That being said, you want to learn how to manage personal finances by:
- Keeping it simple
- Keeping it consistent
- Keeping it accountable
Let's take a closer look at how to manage personal finances. :)
Budgeting Personal Finances - Keep it Simple!
When working on how to manage personal finances, kiss them! No, not like that. ;-) By 'kiss' I mean - Keep It Simple Smarty (updated version!)
In your personal finance spreadsheet you want to have 5 parts:
- Income
- Expenses
- Cashflow
- Assets
- Liabilities
Note: Don't know what those words mean? Find out by learning how to write up a personal finance spreadsheet here!
Once you have those 5 parts you're set. That's it. There's no need to make it more complicated than that (and it might be complicated enough as it is!)
It's important to keep it simple that way you won't stress out. Don't worry, this way you'll write out your budget quickly enough to go do more enjoyable things (like checking out this website!) :-)
Keep it Consistent!
So let's say you've written out a personal finance plan (good for you!), what next? You want to write one up consistently.
It can be every week, 2 weeks or each month. It doesn't matter as long as it's not something like once every financial disaster!
What matters when budgeting your finances is that you budget them regularly and rhythmically. For example, I don't recommend budgeting them three days in a row and then not doing anything for three months.
You want to keep it rhythmically because it keeps you more aware of your personal finances. In any case, being consistent when learning how to manage personal finances is a must (if I must say so!) ;-)
Keep it Accountable!
When learning how to manage personal finances you want to have a simple system to track your money habits.
Once you know what your money is doing, it's very important to be honest with yourself and write down where you're money's going to the best of your knowledge.
I say that because if you lie to yourself then far worse things could happen than a poorly written financial statement (worse than being locked out of your apartment wearing those pajamas your mom gave you last Christmas!).
I also say to the best of your knowledge because unless you're extremely disciplined, it's hard to keep track of everything.
I have my own system that might be complicated for most people but it works for me (I'm a geek, you see). I use envelopes and my daily planner to keep track of my money.
I also hold myself accountable every time and face my money challenges. I make myself feel guilty when I'm not truthful about my finances and I recommend that you do the same.
My Final Thoughts
All in all, a combination of budgeting personal finances in a simple, consistent and accountable manner will make sure that you learn how to manage personal finances for yourself.
Writing one up shouldn't take more than 30 minutes. So simply investing 30 minutes a week/two weeks/month is enough time for you to have something that shows you where your money is going.
Once you have your statement, put it in a specific place (and not your random second drawer where you stick all those things "you'll handle later") so that you can find it when you'll need it again. You can even take a picture of it and put it on your computer!
Find something that works for you and then stick to it for a while (30 to 90 days is a good amount of time!)
Remember also that budgeting personal finances is not about restricting your lifestyle - it's about knowing the consequences of it and having choice over what to do about it!
