Authored by Jackie Acosta in Personal Finance
Published on 12-12-2008
It is often assumed that for personal budgets to work or to succeed that a certain rigidity and strictness must be used when maintaining finances. While there is some truth to this matter, personal budgeting can also work the opposite: the more flexible the approach is, the easier it is to stick to our goals.
Personal budgeting can be likened to a diet: there are different diets for different needs and types of people, but despite this fact, success only comes if the person is determined to make it work. If the diet is hard enough to do on a day to day basis, this will drive the dieter to succumb to quitting the diet altogether, or derail weight goals in favor of a newer diet that doesn’t seem so different from the previous one.
Likewise, personal budgeting should be something that each individual must approach with confidence and determination. For an individual to successfully manage his finances, he must first know what his goals or objectives are. Is it to save up for a new home? Pay off college debts? Start a small business? This will determine how much a person needs to achieve and also dictates a time frame, which one should work on.
Flexibility comes in the planning each step to reach that goal. For example, if you are thinking of putting away x dollars a month, allow yourself to be lenient the means to achieve this amount. For example, you can cut down on unnecessary club memberships or maybe think of finding new ways to make money if your monthly spending does not allow you to put away that much. For some people, they prefer having their salary auto-debited upon receipt and just work on the remaining amount for the rest of the month. It is important that you choose an option that suits you and your lifestyle. Being flexible in your monthly budget means being able to stick to your budget without suffering on your lifestyle aspect. You’ll be surprised to know that you didn’t really need that gym membership, and the money you saved from cutting it allows you to put more into your small business investment.
It is also important for you to have a document to keep track of your budget. While flexibility is the key word here, having a regular check and balance in doing personal finances allows you to review if your decisions keep you on track with your goals. For example, if you had gone over the intended budget for dining out last month, you can adjust your plan by either cutting down on other things to support this important budget, or find ways to be more resourceful by eating at home.
The bottom line is, you should choose a budget plan that allows you to reach your financial goals without hindering you from enjoying the fruits of your labor. A budget is something that is supposed to make your life easier, not difficult and tasking. It is also helpful to review your goals frequently, as this will keep you on track. Good luck!