Your friends are planning a group cruise to Alaska. Your spouse wants to get new kitchen countertops. You know you need to replace your car soon. But one look at your bank account leaves you hanging your head. You just can’t afford to do any of it.
Obviously there’s more to life than cruises, countertops and cars. But you get the picture. Living paycheck to paycheck forces you to say no to things you really wish you could do. It might be something more important than a vacation or renovation project. Maybe it’s contributing to your 401(k) or paying off the house. You’ve got a decent income—so why don’t you have any extra cash?
If you find yourself here, it’s time to switch gears. Telling your money where to go lets you live the life God wants for you. Here are four steps to get you started.
1. Make a budget
And not just any ole budget—but a zero-based budget. Write your income at the top and work your way down your list of expenses. And don’t forget to put giving and saving first. If you stick those categories down at the bottom, you’ll never have money for them.
Related: How to Make a Zero-Based Budget
Your goal is to spend every dollar on paper and with a purpose. Give each dollar a name and a job to do. If you don’t, your money will disappear and leave you wondering where it went. And remember—this is your money! You can do what you want with it, but make a plan first. If you want to go out to lunch three days a week, that’s fine. Just put it in the budget at the start of the month.
2. Set realistic expectations
It would be great if you could spend $50 on groceries and $300 on entertainment each month. But unless you’re taking up a “Ramen only” diet, that just isn’t realistic. Don’t set yourself up to fail before you’re even out of the gate. You want to set limits, but don’t go bananas. Keep in mind that everyone’s budget is different. Make yours work for you.
Don’t get frustrated when the first few months are less than perfect. It takes practice to get your system down. Budgeting isn’t really about math skills—it’s 20% head knowledge and 80% behavior. Give yourself about three months to work out all the kinks.
It’s a good idea to make course corrections as you go. If you’re always going over your grocery budget, you might need to up the amount. Or if you constantly have money left over in your entertainment category, consider moving those dollars elsewhere. Make tweaks until you find your budget sweet spot.
4. Be consistent
Budgeting isn’t a “one and done” deal. At the start of each month, sit down and create a new budget. That doesn’t mean you have to make a whole new plan from scratch. But not every month is the same, so you have to take that into consideration as you’re planning out your paycheck. You’ll probably spend more in December because of Christmas than you’ll spend in a month with no birthdays or holidays.
A budget won’t do you any favors if you don’t stay on top of it. Help yourself out by making a meal plan and planning for semi-annual expenses and big purchases. Just keep at it. It pays off—literally!
When you tell your money where to go, you’re free to live the life you want—not the life you settled for because your dollars wandered off when you weren’t looking. Your stress level drops. You regain a sense of control. And you begin to understand what financial peace really means.