Right now you have a certain amount of money within your control. All of that money has a plan already otherwise you would not have placed it where it is today.
But it’s all just money right?
- Why bother to put it in savings?
- Why leave it in checking?
- Why have any in cash?
Why? Because you want that money to do certain things for you. The cash is there to perhaps buy some gas, pick up some groceries or rent a DVD. The checking account may well be for paying the utilities, the mortgage, or the credit card bill if you have one.
But the savings is different isn’t it? Or is it?
The savings you want in place “Just in case.” It’s a back up, a rainy day fund, Christmas money or a long dreamed of trip somewhere.
Whatever it’s purpose you have a plan for it. Don’t you?
Well that’s all a budget is, it’s a plan for your money.
You may think that a budget is like putting handcuffs on. You think that if you have a household budget then you won’t be able to have fun and buy the things you want anymore.
Nothing could be further from the truth.
All a budget does is insure that the bills get paid, money is put aside for a rainy day and that you have fun and get to buy stuff. After all it’s your money right? Well a budget is nothing more than a plan for your money. Your plan, you decide.
The only catch is that if you want your plan to succeed than you need to follow through and do exactly what the budget says to do with your money.
Uh oh, there’s the handcuffs, you knew they were there!
If that’s what you think then you aren’t paying attention. It really comes down to 2 simple steps. You decide what you want your money to do then you stick to the plan that you decided on. If you do those 2 steps then you will win with money.
Okay, so how do I do a budget?
Well that’s where YNABcomes in. YNABis a formal plan for your money that prior to this was just a loose collection of perhaps, maybes, and “I thinks” floating around in your head.
Budgeting is what YNABdoes. It gives you a place to firmly put down “on paper” exactly what you plan to do with your money. In YNAB you have 2 easy steps.
- Record how much money you have.
- Assign it to Categories (named places where you want the money to go) until you have used up all of your Available money all the way down to $0.
Does this mean that you have to spend everything you have and be broke!?
It simply means that you decide where the money need to go. Yes, some of it will be spent.You have to eat, keep the lights on and have shelter. But some of it will be told to stay put in a Category like “Vacation fund” or “Property Taxes”. These type of semi-annual or annual “sinking funds” are where you would park a set amount of money each month in order to have the money available when the expense or Outflow of money comes due.
No more scrambling to come up with the tax money before they tack on late fees. No more arriving at your annual vacation time and having to sit at home because you don’t have enough money to travel. By assigning (read: budgeting) a little bit of money aside throughout the year you get to breath when life happens and just cut the check and pay for it because you had a plan.
You had a budget.
So start a budget today and follow through with it. If you do you will have a happier life and you will win with money.
Oh, and I can help if you need some personal advice. 😉