It’s Friday and it’s time for our word of the week. The word this week is Budget.
I chose the budget because I’m knee deep in budgets. I’m working on my new book, the Minding Your Money Answer Book so in addition to listening to podcast episodes and articles I have written on the subject – I decided to do some research. Who knew there were so many takes on budgets. For example, there are zero budgets where nothing gets in it without a compelling reason, there are reverse budgets where you look at your spending and then build a budget based on that, and there are goal based budgets of which I am a fan.
There are so many options that you are bound to find one that resonates with you. However, regardless of the type of budget, everyone agrees that having a budget is the quickest way to where you want to go financially because it helps you stay focused and on target. And, just in case you forgot the basic template for a budget is to list your income and all of your expenses and then subtract your expenses from your income. The goal is to break-even or have something left over. Otherwise, it’s a sign that you are living beyond your means and that can start to take you further and further away from you ultimate goals.
Here are three things to include so you don’t fall into budget traps which can lead to abandonment:
- Allow some fun money in your budget – you know mad money so you don’t feel constrained
- Match your budget to your personality. In other words, if you are not detailed oriented, don’t create a budget that requires you to dot every “i” and cross every “t”
- Build in some flexibility or a cushion because things always come up and they come up more often when things are tight cash wise.
Our word of the week – budget – it is one of the best tools to keep you on track to get to where you want to go.
Got a suggestion for a word of the week that you would like? If so, send it to me at firstname.lastname@example.org.
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Thanks so much for listening and as always remember that minding your money really is the path to a richer life!