We want to help you thrive above all else and get off the struggle bus. There are technical tools to handle money but that is not the only component to achieving success. As in any sport or challenge, it is not all muscle and mechanics – there is a mental aspect. The same goes for budgeting. You may think it means keeping the numbers in line. But it is much more my friends. If it were just math no one would be struggling with their finances. Winning the money management game requires mechanics but also a certain mentality. Dave Ramsey says it is 20% math/mechanics and 80% behavior/mental, so focus on the mental.
So, what is the mental component I need? Well, glad you asked. You need to have an attitude of contentment. Contentment is simply being thankful and at peace for what you have without a strong desire for anything else. This is essential. Contentment keeps you from spontaneous spending and overages. It helps keep you in line with your goal.
What is the second mental component?
Goal setting
Goals give you mental directions because it lays a plan or a path towards the destination that you are excited about. So, create one. Dream of your financial destination and map out the path to get there.
Now the math
Mapping out the path includes counting the cost to get there. Here’s where the math comes into play.
- Determine how much you bring in (aka net paycheck) – income
- Determine cost of bare necessities A) Food B) Shelter C) Transportation and D) Clothing -these are the basic clothes not high-end items. Your payments should go to these first in this order.
- Assign every remaining dollar a job allocating money to accommodate your goals
- At the end, your income minus expenses should equal zero. (Income – Expenses = Zero).
- If things do not add up, either reduce expenses or increase income. Keep in mind to never spend more than you have.