People who fail at budgeting fail because they do not have a strong enough calling to budget. If you have a strong enough “why” to push you to fight in order to get your finances in order, then budgeting will be easier for you to do.
You are less likely to give up. You are less likely to get lazy, or bored, or tired. Therefore, part of the success story lies in spending time to identify the “why”.
There are many reasons why you may want to master your budget.
Here are some ideas.
· To free up your time. You may feel as if work is taking up all of your time. You may want to cut down on work or change jobs completely, but you can’t do so because there are bills that need to be paid. A lifestyle needs to be supported. Getting your budget in order may be just want you need to decrease your spending, thus allowing you to take that part-time job or cutting down on your work hours. Some people even want to become so financially savvy that they can pursue complete financial independence and retire early!
· To relieve stress. Having a shortage of money can be very stressful. However, if you budget correctly, you should never run into that situation. Mastering your budget gives you more flexibility and allows you to be better positioned to deal with unexpected expenses.
· To have more freedom. The more financially secure you feel, the more freedom you will have when making life decisions such as changing jobs, quitting work, traveling the world, starting a business, starting a family, and more. When money is tight, these things may seem very risky. But when you have a grasp on your budget, you can predict how much freedom you have in pursuing your passions. For example, if your dream is to take time off and travel the world in 2020, you can definitely make that dream happen by planning ahead and using your budgeting skills to prepare yourself for that.
· To support yourself and your loved ones better. For me, this was MY “why”. I was graduating from dental school with over half a million dollars in student debt, and was also about to get married. I knew what a burden I was choosing to bring into our marriage. He didn’t mind it, but I did. I was propelled forward with this drive to release us from this student debt, so that we can be free to pursue the lives we want to lead without being tied to working in certain fields to support large loan payments. It isn’t fair that the person I most love would be affected by debt because of the career I chose to pursue. So I embarked on a journey to get our finances in tip top shape, and we have mastered our budget so well that what people once told us would be impossible to do is being done! They said we wouldn’t be able to pay off our debt in under ten years considering the salary we would be making. Well, we are on track for seven years, and it all started with mastering our budget!
Whatever the reason may be for you, I want you to take out a piece of paper and WRITE DOWN what your reason is. It is not enough to think it, or type it. I want you to make that reason physically present. Writing things down accesses parts of your brain that typing or speaking does not. You need to get into that space and really dig deep as to why you are doing what you are about to do.
When we started our financial journey, we did not start with numbers. We started with dreams. Our financial planner sat us down one fall evening right as the year’s warmth was dwindling and asked us questions we never asked ourselves.
Not only did he put our financial big picture into focus, but he also made us seriously consider our life picture. Our finances are meant to free us, to give us the life we dream of, but it cannot help us if we don’t know what we dream. Likewise, our dreams can’t provide the motivation to tackle our finances if they aren’t in focus.
In order to help others achieve their budgeting goals with some level of success, I’ve created a questionnaire that I truly believe will facilitate your journey towards financial freedom.
Anyone who is involved in your finances should join the conversation, whether that be your spouse, parents that you are supporting, or children that you may have. This should be discussed after the Money Egg Exercise, a time when your mind is hyper aware of your thoughts on money.
I recommend that you do not review these questions before the discussion, nor shall you write down your answers.The way we process information when we write is not the same way that we process information when we speak. I find that our voices in writing are once removed. And while it may behoove you to think and dwell on your answers a bit more, I’d like to give others an opportunity to hear your most forward thought. There will be time for reconsideration later. A time to align all your opinions. Right now, I just want you to ask yourselves these questions.
1. Where do you see yourself in fifty years?
2. At what age do you want to retire?
3. Do you see yourself doing something that earns an income after retirement?
4. Where do you hope to retire?
5. Will you have done only one job and stuck with it?
6. What are some alternative careers you wish to pursue?
7. Are there any hobbies that you would like to take up, if there was no need to go to work?
8. Do you wish you could take up these hobbies now?
9. What parts of the world do you wish to see during retirement?
10. Do you wish to travel as early as now?
11. Will you need to support any family members, such as children or parents?
12. How much support would you like to be able to give?
13. Would you like to contribute to a non-profit or do volunteer work?
14. How important is giving back to the community to you right now?
15. Will you have a home for retirement?
16. Will your work have a retirement package for you?
17. Where do you see yourselves in ten years?
18. What do you see yourself doing?
19. Do you see yourself with kids?
20. Where will you be living?
21. Are there any plans for buying a home?
22. What would you have hoped to accomplish professionally and personally?
23. What would be your ideal weekday?
24. Who do you wish to spend every day with?
25. Where do you see yourself in five years?
26. How do you think you could improve your current life both professionally and personally?
27. Do you want to get married?
28. Do you want to go back to school?
29. Do you want to learn something new?
30. What do you see yourself doing?
31. Will there be kids or a home to take care of?
32. Will would your ideal weekday look like?
33. Where do you see yourself in one year?
34. Do you think you will be at the same company or doing the same job?
35. Will you be living in the same city?
36. Who will you see every week?
37. Where do you think you stand in your financial journey and personal journey right now?
38. How happy are you with your accomplishments thus far?
39. Is there something that you wish you could change?
40. If a genie could grant you three wishes, what would they be?
41. If you won the lottery today or inherited a million dollars, what would you like to do with the money?
42. What is the biggest burden to you right now?
43. What is the most important lesson you’ve ever learned?
44. If you were diagnosed with an incurable illness and only had five years to live, what would you like to do? Who would you like to spend it with? How would you spend it? How much money do you think you’ll need?
45. If you were diagnosed with an incurable illness and only had one year to live, what would you like to do? Who would you like to spend it with? How would you spend it? How much money do you think you’ll need?
46. If you were diagnosed with an incurable illness and only had three months, what would you like to do? Who would you like to spend it with? How would you spend it? How much money do you think you’ll need?
47. If you were diagnosed with an incurable illness and only had one week to live, what would you like to do? Who would you like to spend it with? How would you spend it? How much money do you think you’ll need?
48. If you were diagnosed with an incurable illness and only had one day to live, what would you like to do? Who would you like to spend it with? How would you spend it? How much money do you think you’ll need?
49. If you were diagnosed with an incurable illness and only had one hour to live, what would you like to do? Who would you like to spend it with? How would you spend it? How much money do you think you’ll need?
50. What is your biggest fear?
Determine Your Goals
Once you have answered the priorities questionnaire, I think it becomes apparent what matters most to your life. You begin to realize the big picture.
Now it’s time to implement a financial plan that will give you the life you want to lead. We must create a budget that is focused on your goals.
In this way, we have an inspiration to keep on keeping on when the times get tough. It has been shown that most people fail at budgeting because they don’t want it bad enough. Unfortunately, when asked, most people cannot define what “it” is.
When Mike and I answered our own questionnaire, it became easily apparent to us what we wanted out of life.
- We both wanted to travel and see the world.
- Having kids was not a priority, but our existing families are. If we had an hour to live, they would be the only thing that mattered.
- Neither of us listed having a luxurious lifestyle as a priority.
- When asked what we would spend our money on, we listed experiences.
- When asked what we would do in retirement, we said taking up new hobbies and learning new skills.
- If neither of us had to continue working for money, we both said we would still work, but in creative fields. This led me to pursue multiple side hustles that would achieve that life. I ended up opening a bakery and creating a dog business via Rover. I ended up with this blog.
- Neither of our retirements involve a TV, which is probably why we ended up with a life without TV.
- We wanted a home, but it didn’t have to be a big one. So we eventually joined the small house movement.
- Lastly, freedom, to me, seemed to matter above all else. I think that without freedom, there would be no happiness.
Knowing these priorities, I then wrote a list of goals, some of which included:
- Get rid of all credit card debt and continue to pay them off monthly.
- Tackle student debt aggressively.
- Set aside a percentage of our incomes for travel.
- Work part-time in dentistry, so that I could also pursue other hobbies.
- Live a simple lifestyle in order to save money. Focus on experiences rather than things. Brownie points if those experiences end up being free!
- Save money for retirement and have an emergency fund.
- Save for a down-payment on a home.
- De-clutter our relationships, so that we could spend more time with the people that matter most.
When you have your goals jotted down, you know your mind is focused on what you are budgeting for. You have a why to motivate you. You are set up for success. All that is left is to know HOW.
UP NEXT: CREATING A BUDGETING TOOL THAT WORKS