How to Guarantee That You Will Stick To Your Budget
Take Responsibility For Your Actions
It has been said that we are 1 or 2 habits away from a major transformation. Our habits define our lives and we can trace our success and failures to the way that we live our lives. If you are unhappy with your personal relationships, your career trajectory or your bank account look at your daily habits. It can be very tempting to blame other people for our station in life and there are many things that are out of our control. However, the one person we have 100% control over in this world is ourselves. We get to decide how we react to every situation that occurs in our lives and we can change and grow ourselves.
In the world of personal finance, I have heard many people say “my boss didn’t give me that raise because they don’t like me.”, “My ex took all of my money in the divorce so now I’m ruined.”, “I don’t have time to work another job”, “my parents never taught me how to handle my money”, or “I grew up poor so I can’t do better.” While these statements may make us feel better in the moment or will garner sympathy from our girlfriends over drinks, it creates an environment of helplessness. When people feel helpless, they are giving their power to change their situation to other people.
Small Changes Lead To Big Results
In “The Compound Effect: Jumpstart Your Income, Your Life, Your Success” by Darrin Hardy he outlines a system that I have found useful in all areas of my life. I have recently finished my third reading of this book since 2014 and every time I have read it, I have found new ways to apply these principals to both my personal and financial life. This book introduced me to the concept of 100% responsibility. At first glance this idea seems a bit crazy because we all know that we can’t control how other people treat us or if we walk out and have an accident due to someone else’s negligence. In fact, that was my initial response the first time that I read about it but once I delved deeper into the concept, I found that taking control of my self and accepting responsibility for my actions or reactions gave me the strength to bounce back faster than most people. Was I upset when I felt like I had been taken advantage of or frustrated with myself for repeating the same money mistake? Absolutely. Changing my focus from “This is their fault” or “The sale made me overspend” to “How can I learn from this situation” and “I knew better than to buy this item” helped me change my future behavior.
Our successes and our failures are hidden in our daily habits. In The Compound Effect, Darren Hardy gives the example of an airplane taking off and plotting a course for one destination but by allowing their direction to be changed by as little as 1% will put that plane hundreds of miles off course. This is what happens to most of us with our finances. Its usually not the $400 purse that breaks our budget. It is several unplanned purchases under $50 through out the month that add up to our budget being hundreds of dollars off course. Instead of beating ourselves up and declaring that budgets don’t work or that we are just not good with money I recommend making small daily changes to your spending.
Track Your Habits
Studies have shown that it takes 21 days to formalize a habit and about a year for it to become a permanent unconscious habit. Twenty-one days really isn’t that much time in the scheme of things but when you are trying reverse years of poor spending habits it can feel like an eternity. One of my favorite methods of calibrating my spending is to track every unplanned dollar that I spend in a small notebook for one week.
The act of physically writing down every stick of gum, tank of gas, e-book and pair of pants for my daughter brings my awareness to my spending. Once I get to the end of that first week, I find that I have started skipping random purchases just to avoid having to write them down. Once I have my total for the first week, I then start the second week and try to reduce the amount of unplanned spending in order to beat my first week total. I repeat this pattern for the third week.
At the end of the three weeks I can tweak my budget based on real world spending instead of wishful thinking. Having concrete information also empowers me to build a budget that I am more likely to stick to because I know where my temptations lie. Now instead of feeling guilty about going to the movies I can build it into my budget which increases the likelihood that I will not overspend in that area.
Reap The Benefits Consistency
The tricky part of this process is that because you are making small, consistent changes you won’t usually see instant results. Most of us quit before we have reaped the rewards of constant forward momentum. Changing your mani-pedi schedule to every three weeks instead of of bi-weekly and putting that money towards debt repayment doesn’t feel all that exciting in the third month. You may not even see very much movement in your immediate debt reduction totals. However the compound interest that you are able to avoid by putting that extra money towards debt will shave months off of your repayment plan for that bill. Keep the long term goal in front of you, review it often and stay the course. Maintaining your new trajectory guarantees your success every time.
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