Budgeting is a lot like dieting. Crazy I know. Please let me explain. Often times at the beginning of the year, we decide to make a list of new year resolutions; exercising, dieting, budgeting, etc. Most individuals get off to a great start, but later comes the binge eating or disappointing Dave Ramsey by falling off the budget wagon.
We all have good intentions right? You keep track of all your expenses and calculate that you can save $500, $1,000 or even $1,500 a month if you drastically cut your expenses. This, in my humble opinion, is the first mistake. When you drastically cut something you are going to feel it immediately.
A lot of times when people go on a diet they cut the amount of calories by so much that they are basically starving themselves. Yes, you will sometimes lose a quick five pounds, but eventually level off. Within two or three weeks you cannot stand it anymore and fall off the wagon. Let the binge eating begin. Budgeting is a lot like that because if you create a budget that radically changes your lifestyle quickly, it will be hard to keep doing it.
Instead, try gradually reducing your expenses by selecting one or two expenses and cut it by 15%. For example, let’s say you spend $100 dollars a month on eating out. If you reduce that by 15% and that would give you $85 dollars to still spend toward eating out. Are you really going to feel the money pinch on that? Probably not, but it slowly allows you to start reigning in your expenses. You can easily keep reducing that expense each month if needed. In time, you will see a significant difference in the budget. It is all about SUSTAINABILITY.
I continuously go back to the notion of gradually reducing expenses and finding a realistic number to save because I strongly believe that is the right recipe for getting your finances in order. Extreme budgeting or dieting is not a long term solution in my opinion, merely an unsustainable method that is destined to fail. Now that does not mean you cannot find creative ways to save money, but do not set yourself up for failure. Remember, baby steps in the beginning. If you have a well thought out plan, self-discipline and a little luck, anything is possible. My challenge to you, is pick one expenditure and reduce that by 15% and see if it had a major impact on your lifestyle. What are your thoughts?