At the beginning of every year, we all want to get into shape.
Both physically and with our finances.
We go hard in January. We sign up for the gym. We slash our budget to the bone. We even start carrying a lunchbox to the office each day.
And then, by around Valentine’s Day we are back to our old ways.
You see, creating better habits requires discipline.
And, when it comes to money, it’s easy to lose that discipline when things are going well. But it’s critical to get in shape and build a budget on sunny days, so good habits are part of our routine when days are difficult.
One of my favorite quotes is “Discipline Equals Freedom” and that applies to money, fitness, relationships, and anything else you can think of.
But how do you create discipline? Well, it starts at the beginning.
- Be Honest: Take a good hard look at your income and your expenses. How much are you brining in? What are your expenses? What is fun and what is frivolous? What are the things that you can live without? If you are disciplined, you can do what you want.
- Be Realistic: We are not telling you to eliminate all of the fun in your life, but you need to understand that little expenses become big expenses. A Starbucks coffee everyday, weekly beers with friends, or Uber Eats three times a week will add up. When you are on a diet, if you aim to follow it 100% of the time, you will fail and you will quit, But, if you aim to stick to it 80% of the time, maybe you’ll succeed 50% of the time and you’ll stick to it. Think about that from a Starbucks perspective. If you stick to your budget 80% of the time, instead of spend $400 a month, you’ll only spend $80.
- Eliminate the Word “Miscellaneous” from Your Budget: The enemy of a good budget is discretionary spending. Be explicit. If dry cleaning costs you $100 a month, write that into the budget. It is hard to track miscellaneous expenses if you aren’t explicit.
- Stock the Freezer: Takeout is the enemy of a good budget. We are all human. We all get tired on a Thursday night and just want to Chipotle from GrubHub. This is death by a thousand cuts. Little expenses will snowball, and delivery charges will mount up. Take the apps off of your phone. Streaming Services and iTunes will hamper your budget.
- Be Transparent: Sit down on the same day every month to assess your spending. For me, I put all of my expenses on a single credit card and pay it off each month. This allows me to get granular when spending increases and helps me to stay on course.
- Stop the Spite Spending: Too often in a relationship with a shared budget we multiply our money problems. If our partner upsets us, we get our revenge by spending. Spite spending only hurts you in the long-term.
- Put Your Savings on Autopilot: If we don’t see it, we can’t spend it. If we don’t have funds in our checking account, we tend to stop our spending each month. Most of us leverage direct deposit into a checking account each month, but most employers can deposit a portion of our paycheck into savings or an IRA.
Remember: Discipline equals freedom. When you create better habits and stay focused on your goals, your money will begin to work for you instead of you working for your money.