5 Key Steps to Sticking to a Budget
Why is it so difficult to stick to a budget? This is one of the most frequent questions I get asked, and the biggest problem we all have with starting the process of managing our finances. Before we start honing in on the resources we have, we're managing our finances without a purpose, and while we're getting by on a monthly basis, there is no traction toward bigger financial milestones like: paying off debt, building wealth, giving, or saving regularly.
The solution lies in the keys below and requires regular routine maintenance of our focus, and discipline. Over time we begin to develop bigger budgeting muscles that help us stay on track. The five keys to sticking to a budget will help you win with your money and achieve your goals.
1. Define Goals
Before we decide to start budgeting, it's helpful to spend a bit of time soul searching. Asking "why" we really want to get a handle on our finances, why do we want to pay off debt, why do we want to build wealth, why do we want to give, why do we want to save money?
These questions help us understand our deep motivations. Keep asking why until you really know the answer. At that point, our dreams can be pulled from the clouds and turned into goals. Put some time restraints and numbers behind goals, because a vague goal is one that is hard to achieve.
Once we know our why, it's much easier to do the following steps.
2. Monthly Planning
With your "why" in tact, we can start to create a monthly plan (budget) to start chipping away toward the goals we set. By putting together a monthly budget, we're not only breaking down our bigger goals into smaller goals, but we're also keeping a closer eye on our monthly expenses.
And since most paychecks and bills come monthly, it's easier to get into the details and see what's happening at the monthly level rather than quarterly, or yearly.
Every month is a new opportunity at a better budget that gets us closer to our goals.
3. Make Sacrifices
While keeping an eye on our goals and creating a monthly plan will help us understand what's happening, sacrifices are what will help us get to our goals faster. Although, I'll tell you that they won't seem like sacrifices once you know your why. They will seem more like a shift in priorities.
Before, when we tried to start budgeting or tried to get out of our financial mess, we ran out of will power, and slipped back into old habits and routines. Once we focused our energy on our why, the change in priorities now seemed worth it and more attainable.
Being able to delay gratification because our money would be better directed at our goals is a key turning point in the process to sticking to a budget for the long-term.
4. Momentum Advantage
Once we engage the process we'll start to see some momentum toward our goals. It's important to use this to our advantage. To constantly be trading in bad habits for good habits, and building on the momentum that we've worked so hard to build.
And once that train gets headed down the tracks, it's hard to stop!
5. Celebrate
Most of us avoid the personal finance topic because we think that we'll never get to have any fun. That's not true. Of course, there must be sacrifices, but it's also important to build in some celebrations when we reach our goals.
Of course, we'll want to be sure that our celebrations don't de-rail us from all the progress that we've made. This could be buying something you put off while working toward your goals, a night on the town, or a trip to your favorite restaurant. Simply calling it a celebration helps make it special.
Take time to celebrate the small victories.
I can tell you from personal experience that this works. It's hard to get started, but once you do you'll be on your way to financial success.
For us, our why was being debt free before growing our family (hence the photo). The why at that time seemed like something we just had to do. It drove us to make the sacrifices needed over the next few years to get out of debt, save up a six month emergency fund, and start saving for our future.
We've sharpened the tools, discipline, and focus over the years and it's allowed us to dream bigger dreams. It's the reason why I made a recent job transition to help others in a similar way.
You have your own dreams and I'd love to help you create a plan to achieve them. Let me know if I can help. You can email me at eric@wordsofwilliams.com if you want chat about your situation. Or check out the financial coaching page.
What's your biggest goal financially right now?