A Better Way To Budget
August 22, 2023
Stop making your monthly budget based on a guess. There is a better way to budget. Have you tried to budget before but were always unable to stick to your budget? Did you always find your budget hard to follow because it wasn't accurate or gave you realistic information about how much you had to spend? Do you make an irregular or inconsistent income? Whether you are paid hourly, commission, tips, or any other form of pay that is irregular, we can teach you how to budget better.
Irregular Income
This is the most common issue I have heard from people who struggle with making a monthly budget. “I don’t have a regular income. How much do I budget for each month?” I get it. Many budgeting apps and methods want you to guess how much you will earn next month based on what you usually make. This is unrealistic for a lot of people who have an irregular income, and even if you are salary there is a better way to budget. While we budget in terms of months, we should be thinking about our expenses and goals far beyond just the next month. When we earn a dollar, we should assign that dollar to a job. Not just for this next month, but until we spend it. That could be this month's groceries, or it could be Christmas presents in 6 months. Our budget should tell us for every dollar that we currently have what their job is. Whether it is for this month or next year, our planning should go far beyond our immediate wants and needs. This is how we can truly break the paycheck-to-paycheck cycle. We don’t budget based on our guesstimated earnings this next month. That can be used to help us set realistic goals, but when it comes to allocating real dollars, we only budget the money we actually have currently.
Running Out Of Money
The second most common issue I hear from people who base their budget on a guess is running out of money before their next paycheck. Let me elaborate on the issue. Let’s say we plan to make $4,000 this month. So with most budgeting strategies, you would allocate $4,000 towards your various categories before the month started. That may tell us how much we have to spend this month on a category, but it doesn't tell us when that money is available to spend. If we budget $600 for groceries for the month based on how much we think we will bring in this month, but we don’t get half of that money until the 20th of the month, then we are left with a pretty big gap in knowledge. How much can I spend on groceries today? This results in people running out of money before they get their next paycheck. Their budget may say they still have money to spend on groceries. What their budget isn’t telling them is that that money isn’t available until the 20th of the month or whenever they get their next paycheck. This is where other budgeting apps fall short. They don’t help you accurately plan for when you can spend that money or when that money is actually available to use.
We not only believe that budgeting this way is simpler, but it is also far more accurate. We can remove all the guesswork about budgeting and let you focus on setting goals that help you live the life of your priorities.
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