Have you set up a new budget for the New Year? Do you revise your budget as things in your life change? Maybe you think of budget as a four letter word.
Budgeting and dieting are a lot alike. A diet restricts food intake and cuts out everything that we think of as fun food. That’s why diets don’t work. A lot of people view budgets in the same way. Everything that is a must-pay is added to the budget and there’s often no room for fun in an effort to get finances in order. How is a budget going to work when a diet doesn’t? For long-term weight loss, we have to change our way of eating. For long-term financial success, we have to have a financial plan.
I read an editorial about a wallet that helps consumers stay on budget. When your account approaches a spending limit, the wallet becomes more difficult to open. It makes sense. So many consumers do not carry cash. Cash is harder to part with because it’s tangible. Credit cards offer instant gratification and it’s very easy to let the balance build. While debit cards, like checks, are to access cash we have available, they too are easy to abuse. With cash you can spend only what you physically have. I doubt I would buy a new wallet, though. I love my wallet; I’ve had it forever. It holds everything and it’s pink.
If you want to stick to a financial plan, try to ignore that you’ve got yourself on a plan. Self control isn’t enough. Set aside enough of your plan for discretionary spending and fun. Work a goal into your plan. Reward yourself for meeting milestones. Automatic savings is a great way to do this and you don’t have to think about it.