Budgets Usually Don’t Work, Here’s How to Fix That

Budgets Usually Don’t Work, Here’s How to Fix That

May 21, 2018

Being a nerdy math guy, I kinda like playing with numbers and seeing the outcome. I like fiddling with percentages and ratios and all that good stuff. But you don’t have to be a math person to be good with money.

The main issue I see is that a lot of people have no idea where their money goes. Usually when I ask the response is a one-liner like “BILLS”.

This is where making a plan comes in! (I hate using the word “Budget” because it kind of implies that we are planning our lives down to the last cent.) It is impossible to foresee a car breakdown or medical expense, right? How can we budget for that? This is why I am much fonder of the idea that life is kind of like a sport.

You can practice all you want but when it comes to game time, things will change. You need to be ready to adapt and play the game under all circumstances, rain or shine. By mastering the “blocking and tackling” (the fundamentals) you can execute your plan better. Imagine trying to play football without knowing how to throw/catch the ball or tackle the opposing team. That would make winning much harder.

So try the notion of going into life with an overarching money PLAN. No specific spending requirements, no buckets, no serious math. Just make a plan and stick to it with saving and investing first and spending after. Saving and Investing are your fundamentals, your blocking and tackling.

My plan looks something like this:

-Get paid

-Save/Invest 50% or more

-Use the rest to Survive and Enjoy life

No crazy analysis. No budgets. Just a plan from 50,000 feet in the air. Remember that if you don’t pay yourself first you will never get paid. That’s why I always recommend saving and investing before spending. I know that by now you are thinking:

“Thanks for the tip genius, but I don’t even have any money left after paying bills and eating. What in the world am I supposed to do?”

If your cash flow is tight right now, try to squeak out saving just 5-10% per paycheck. If you have a car lease or loan, read my article on that. If you are drowning in a mortgage payment, here is my article on that too. I am confident that most modern day slaves are not in chains, they are in debt. So if you need help finding a way out of your specific situation PLEASE reach out to me via Instagram, text, or email. I won’t charge you a dime and we can make a custom plan that works for you. This is what I love to do, so please do not hesitate! I want you to be financially free as much as I want to achieve it for myself.

If you’re not in crippling debt, really analyze how much you NEED to spend to survive. It’s probably not 100% of your paycheck. Try to minimize this amount as much as possible. From here, every time you get a check, take a specific percentage out. Hold the cash, smell the cash, just don’t spend the cash!!

YOU just paid YOURSELF.

Now do it again, and again, and do that forever. You will have more money saved than you will know what to do with. AND If you invest that money*, it will grow even faster due to the power of compound interest. (Investing just $100/mo for 40 years at the stock market’s average return of 7% per year is $250,000.)

If you’re ready, you can definitely get into the nitty gritty of the plan. This is kind of like how football teams have specific plays that they run even if the overarching goal is to score points and win. If you were the quarterback of your life, your pre-snap shoutouts would probably sound something like this:

HUT HUT, 10% OF MY PRE-TAX PAYCHECK GOES INTO MY 401K, THEN 20% GOES INTO A ROTH IRA AND TAXABLE INVESTMENT ACCOUNTS, ANOTHER 20% IS SOCKED AWAY IN CASH SAVINGS, THE REST GOES INTO MY CHECKING ACCOUNT TO SURVIVE AND ENJOY. HIKE!!!!

Then you might throw a touchdown, or you might get sacked, but remember that the teams that have a PLAN win more often than the teams that don’t. So manage your money with a similar mindset. Have a plan, build some plays, and execute as best as possible to try to complete the plan.

We can’t all win the super bowl, but that’s not the goal. In this game I think the aim is to strive to be a better version of yourself every day. Whether that is in regard to your attitude, your money, your health, or any portion of life. So practice your blocking and tackling* and make a plan to take care of your money, I promise that you will come out with more points in the end.

*If you’re interested in learning about the basics of investing, check out my blog post on it! I’ve also linked a few books on my home page that I think would be beneficial to anyone that is serious about stepping up their financial health. One of my all time faves, The Richest Man in Babylon, is linked on the right side of this page.

MDAS

If you thought this was helpful, terrible, or somewhere in the middle, please leave me feedback in the form of a Direct Message on instagram @MakeDollarsAndSense, or feel free to send me an e-mail/text to the information on my Home Page. I truly appreciate constructive criticism and opposing views, so bring em on!

P.S. New blog posts coming your way every Monday!

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