We all have heard how important it is to be on a budget – to know where every penny goes, but we still never seem to get around to making one. Most people have a reason (ahem…excuse) why they can’t seem to follow a budget. Here are some “excuses” that may be preventing you from following a budget like you should.

“We never have an “average” month.”

When we do a budget, we try to make it too complicated or we want to use averages and we never have the “average month” so we get frustrated or give up. Every month is unique, so just concentrate on the next month – not an “average” month.

“We don’t have enough money because we are between jobs.”

The reality is, it doesn’t matter how much money you make. Whether you make a bunch of money, are middle class or are living on unemployment, you need a cash flow plan. A cash flow plan will help you prioritize your spending to maximize the dollars you earn.

“We are different and with our family, a budget won’t work.”

Every family is different. That’s why it is important to create a budget specifically for you and your family. Make it work with your income, expenses, and lifestyle – just make a commitment and stick to it!

“I don’t even know where to begin.”

If you are just starting out, don’t over complicate it. Keep it simple so you will stick with it. Start small get a pad of paper and write down your monthly income at the top. Then list your monthly bills. The next step is to list the categories that don’t have an amount due – categories such as groceries, gas for the car, entertainment, clothing, car repairs. Now list the items that may not be paid on a monthly basis such as: trash removal, insurance, car registration, gifts. Keep in mind, these amounts will change.

Now make a couple of commitments. First, make a commitment to stick to this for 30 days. At the end of 30 days, make a commitment for the next 30 days and so on. This will allow you to focus on smaller goals and not overwhelm yourself. Secondly, if you are married, sit down with your spouse and go over the plan for the upcoming month. If you are single, find an accountability partner that will be honest with you.

If something comes up unexpectedly, look to your cash flow plan and see if the unexpected expense is a big enough priority to replace another expense in your budget. Remember, just because we have a new expense, doesn’t mean we have more income to pay the new expense. If the new expense isn’t a high enough priority we wait to pay when we can work it into a future cash flow plan.

My challenge for you is to give a monthly cash flow plan a shot over the next couple of months. John Maxwell said, “A cash flow plan is telling your money where to go instead of wondering where it went.” If you need a little coaching to get it worked out, or if you’re just overwhelmed by the whole process, contact me at jeff@thefinancecoach.net or 317.858.7270.

Jeff Dalverny
Lead Finance Coach