budget allows a savvy money manager to have a snapshot of where he or she is at from a financial standpoint.
A good budget will include a Predicted Budget, an Actual Budget complete with expenses and income- basically a profit and loss statement, and a Balance Sheet.
We will not go into specifics about budget creation in this article but rather the system of maintaining a budget.
Photo by Jimi Filipovski on Unsplash
One of the best things I have done for myself on my journey to Financial Freedom was to create a budget day. A budget day is a specific day of the week where I set aside time to update and hone my personal finances.
For me, my budget day happens to fall on a Monday. Around lunchtime, I will go through and update my expenses, balance sheet and any other pertinent information to get a better gauge of my financial picture.
Being able to set aside 30-45 minutes one time per week has been such a benefit as I am able to put my financial affairs in order to know exactly where I am at. This disciplined practice has allowed me to build the foundation for achievement of Financial Freedom.
I have talked to some people who budget every single day- which is fine too – in fact, at some point it might become necessary for one to plan financially more often. However, I have found that one day a week – 30 minutes at a time – allows me to know exactly where I am and brings me a peace and serenity around my personal financial picture.
Reasons for Creating a Budget Day
So why should you create a budget day? The following are four solid reasons for doing so:
- Consistency – the first benefit is consistency. If you set up a budget day as something that you do as a consistent practice, you will find this type of consistency trickling into other areas of your life. Soon you will find these other areas of your life improving in addition to your financial picture. This is what is often referred to as ‘gaining synergies’; the process of getting your financial affairs in order and being consistent with budgeting leads to positive forward momentum in your life.
- Building the Concept of Layering – By creating a budget day to track your financial picture, you will be able see the small, incremental steps you are taking on the road to Financial Freedom. This ‘brick-by-brick’ mentality is exactly what an astute investor needs to develop to achieve the goal of becoming financially free . Rarely does one have a ‘get rich quick’ scheme turn out. Rather the road to Financial Freedom is paved with one taking those small steps, improving his or her financial acumen on a daily basis and in the end, seeing the fruits of one’s labor come full circle through discipline and hard work.
- Less Stress = Better Sleep – If you are in rough financial straits, creating a budget day might be the last thing on your mind. But in addition to facing your challenging situation instead of running from it, if you create a budget day your financial picture will turn around for the better. No longer will your head be in the sand about your financial condition but you will now have some firm numbers through which you can begin the process of digging yourself out. Or if you are in a situation where you are doing ok but do still see room for improvement to your financial picture, having a handle on your personal finances will give you so much more relief in your life, lower your stress levels, and lead to better sleep through being on top of your financial condition. I can’t guarantee that other areas of your life will stop stressing you out, but at least you’ll have a handle on your financial realm.
- Tracking Progress – This is exactly the case with Financial Freedom – should you choose to begin the journey, you need to be able to measure your progress. In addition to creating a budget to measure one’s progress, it is pertinent that one pairs a consistent day and time of the week to have a budget day in order to update and maintain the budget. Don’t fret – the numbers in the beginning are always small but if you stay at it and keep persevering, you will gradually see your financial picture continue to improve. Eventually the snowball effect will take over in your life and you will wonder why it took you long to begin! In fact, I would bet you will be as happy as this puppy in a swing:
Hopefully you can see a benefit to creating your own personal budget day. Will you be beginning the process of dedicating a certain day and time for a weekly budget day? Or do you have any questions on this process? Feel free to comment below and as always, make today your masterpiece!
Disclaimer: (1) All the information above is not a recommendation for or against any investment vehicle or money management strategy. It should not be construed as advice and each individual that invests needs to take up any decision with the utmost care and diligence. Please seek the advice of a competent business professional before making any financial decision.
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