Changing Your Financial Behavior

 It’s a proven fact, inflow must be equal to outflow, or else there could be a crisis, such as a foreclosure or repossession, or your family could starve.    In the United States, we are fortunate to have programs such as food stamps and welfare to help us when times get tough.  Many of us will never go hungry.  The amount of debt, however, is increasing by leaps and bounds.  The interest rates are at all-time highs and people continue to borrow when the income runs short at the end of the month.  One of the few ways to have a good financial future is to set up a good budget and stick to it, but without sticking to the budget, it really is worthless. 
                Fortunately, I was taught at a young age of 15 how to set up a budget.  I was raised to spend my money wisely and to save.  Setting up the budget, isn’t always the hard part.  All it really takes is a sheet of paper, a pencil, and possibly a calculator.  I am a nerd and love using the computer, so I have my budget typed out on an MS Excel Spreadsheet.  Whichever method works best for you is great.  Now deciding where to spend the money can be more difficult.  Also, writing the budget may be a little stressful if there doesn’t seem to be enough money coming in to meet all the expenses.   

It seems that more people may have trouble sticking to the budget than actually writing it.  But it all starts with the budget and then the next step is changing the spending behavior.  I’ve learned from my group at church called Celebrate Recovery, that the first thing we have to do is admit we have a problem.  If you’ve always been living paycheck to paycheck and bouncing checks or using credit cards, then you most likely have a spending problem.  I was in denial for a long time, until I realized, I had a lot of debt.  I was not one to bounce checks or even reach the point of foreclosure, I’ve always paid my bills on time, but my issue was that I felt it was ok to have certain debts like credit cards and car loans.  Now, that’s another story about how to get out of debt.  But if you’re ready to start the budget and change the behavior, you are on the road to getting out of debt.

                Here are 6 steps to improving your financial behavior:

1.       Write out the budget, either on a piece of paper or on a spreadsheet

2.       Use a cash envelope system

3.       Get rid of temptations to spend such as credit cards, debit cards, or cash in your wallet.

4.       Pay bills, buy necessities first.

5.       Get a support group of people who are doing the same thing as you

6.       Find a mentor who’s already gotten their spending under control

The Importance of Budgeting

All of the political debates and articles about the economy makes me realize how important the common budget really is to us.  I opened my first checking account when I was 15.  I bought my first car with $600 cash I had saved, or I should say, my mom helped me save up from birthday money I had received from the time I was 1 years old.  That first major purchase began my journey of owning a checking account, getting a job and budgeting.

My mom played a major role in teaching me how to spend and save wisely.  I remember sitting down out the dining room table, going over my first checking account statement and balancing the check book.  I think from that point on, I was a financial nerd.  Nowadays I love using MS Excel to set up my budget.  A couple years ago I heard about Mint.com which is also a great spending tracking tool.  But the old-fashioned lined notebook and pencil also works fine too.

The key to a good budget is making sure every penny has its' place.  That doesn't mean we're living paycheck to paycheck, it just means that we know where all the money is being spent.  It's not really all that hard to set up a budget on paper, or computer, but I do admit, it's hard to follow through with the actions of spending the amount written instead of what we want to spend.  I'll talk about spending habits in a future article.

Now, to setting up the budget, there are three major areas of focus:

1. Income
2. Outgoing (spending)
3. Savings

Some people may get discouraged when their income seems so low and once they start calculating it out, it seems they don't have enough to cover all the bills.  Well this is how many of us, our country included, have gotten into debt.  Don't get discouraged.  I was at a point in my life where I was a single mom with three children, receiving no child support and at a lower level income job.  I was too prideful to receive government assistance.  I admit, I used credit cards for things like car repairs and medical bills.  But I managed to pay all my bills on time.  This is why there is a process to financial planning.  The beginning of the process is setting up the budget.  The next steps are to make sure to have good financial behavior and then to shop wisely, which I will explain more in the future. 

In the mean time, stay focused and start setting up the much needed budget!