Eighty percent (80%) of Americans live from paycheck to paycheck.
As children, we were told to save our money to buy things that we want. However, consumerism and a weak economy has rendered many people in debt and in personal bankruptcy.
Do You Need A Budget?
In this interview with Jesse Mecham of YouNeedABudget.com, you will find out how you can make the most out of your hard-earned dollars and get of out of the paycheck to paycheck lifestyle.
Click the play button to listen to the interview.
Spend your money on paper before you get it.
- Plan what you need to do with your money so you’re not spending it reactively. You will find that your dollars go a lot further than you previously guessed.
- Sit down once a month with the money you have on hand and allocate the money.
- Focus on the money you have on your hand. Do not worry about the paycheck that’s coming in two weeks.
- If you are thoughtful about your money, you will end up spending on things you don’t really want to do.
- When budgeting your money, ask youself this: What is the most important thing you need to do with this money?
- Make a habit out of budgeting. Tie it to something you do frequently like brushing your teeth. For example, budget your money after brushing your teeth.
- Do something frequently so it becomes a habit. This applies to managing your budget.
- As you begin to plan what you want your money to do, you become more aware. You become aware of leaks, things that you don’t want to spend your money on, and put a stop to those leaks.
- Planning your budget is all about allocating money for things that you value.
- You are your best financial adviser. You make the best financial decisions for you.
Four Rules in Budget your Money
- Give every dollar a job. Assign a purpose to every dollar. Think of yourself as a drill sergeant and you give a task to every dollar that you have.
- Save for the rainy day. Divide your larger bills and expenses and treat them like monthly bills. Save money monthly for Christmas, year-end taxes, etc.
- Give yourself some slack. There’s no benefit for being accurate with the budget, there’s only benefit in making a decision. A budget only allows you to see where your money is going and make financial decisions. If you go over your budget, reassign dollars as needed. Don’t knock yourself up for overspending. Get back to game. Make yourself flexible and keep on budgeting.
- Learn to live on last month’s income. Don’t live from paycheck to paycheck. The income of small business owners and entrepreneurs vary from month to month. If you live using last month’s income, you don’t have to forecast your income and expenses. If you get a bigger income, then you can have something extra for your savings.
Make your bonus feel like a bonus
Do not spend in anticipation of a future income, e.g, bonus. Many people overspend their monthly budget, thinking that they have a bonus coming. Spend your bonus as it comes on hand and budget it. Thus, when you receive your bonus, you will really feel that it is a bonus.
Small Business Budgeting Tips
- If you’re earning money on the side, you can merge your personal and business finances.
- If your business is the sole source of your income, separate it from your personal finances.
On using credit cards
- Jesse’s main reason for using credit card is for protection. He finds comfort in the fact that he does not have to take out cash.
- If you carry a debt on your credit card on a month to month basis, get rid of it.
- If you spend according to your budget and you’re aware of where you are financially, then you should not be afraid to use a credit card.
Learn how to budget your money. You’ll feel more in control and more at peace even if you just have a little amount of money. If you need something to help you spend your money on paper, check out Jesse’s iPhone app. Just click on the link below:
About Jesse Mecham
Jesse Mecham is the founder of YouNeedABudget.com. He is a graduate of the Masters of Accountancy program at Brigham Young University in Provo, Utah, and a former (slowly recovering) Certified Public Accountant. He is busy teaching YNAB and helping others get a hold of their finances. He enjoys playing the piano, working in the garden, lifting weights, honing his golf swing and taking care of his four kids with his wife, Julie.