Budget Buster: Right Math on the Wrong Path

You’d think a guy like me would be in love with budgets, right?

Well, here’s my knock against budgets…sometimes with budgets, the math may be right, but the path is wrong.

If you’re someone who wanted to lose a few pounds, a nutritionist might design a meal plan for you. And you might have the perfect proportions of proteins and carbohydrates and fats to make all those pounds just fall off and those inches melt away. 

And you might just read that plan over and over again, while eating a pint of Ben and Jerry’s Chunky Monkey ice cream (1200 calories). Man, that stuff is good…especially while reading about how to make a kale and rice cake salad with lemon juice dressing. Mmmm…

Well, in diets and budgets, it does no good to have a perfect plan, if you go down the wrong path.

So, what do you do if you find yourself with a beautiful budget, but horrible spending habits?

1. Save first. Stop waiting until the end of the month [when] you’ve spent money on everything else. Magic happens when you put your priorities where they belong – first in line.

2. Spend cash only. If someone is having a problem with overspending, the best emergency measure that I know to stop the bleeding is to take every credit and every debit card out of your wallet. (Oh, I can hear the groans now.) Spend only cash for groceries, all shopping, gas and dining out. Watch what happens when you pull out $150 in cash to pay for a new pair of shoes (that’s going to hurt). 

3. Discover what you really spend. You may be accounting for every dollar in your budget. But the dollars that are supposed to go to savings are sneaking away and hiding in another category – usually something really helpful, like “miscellaneous.” 

So, for the next three months, I want you to keep an envelope with you at all times. Whenever you buy anything (and I mean anything), ask for a receipt and put it inside the envelope. Your goal is to have 100% of your spending accounted for by a receipt.  

4. Revise your budget with the facts. In three months, you ought to know what’s really going on with your new envelope system. Change all the numbers in your budget to reflect this newly discovered reality.

5. Make hard choices; aka, prioritize. If your goal has been to save $500 a month, you’re going to have to make some hard choices about what is most important to you. You’ve already proven to yourself that you can’t live like you’ve been living and save money – there’s nothing left over. So, what are you willing to change to make it work? 

Now, if that seems too complicated, I’m going to break it down and make it really, really easy for you. You can simply…

6. Keep saving first and keep spending cash. Many have found that if they’ll just introduce these two disciplines of save first and spend cash only, that kind of takes care of everything else. 

If your budget plan and your financial reality are not matching up, don’t go looking to the budget for the answers.

You’re the solution to your busted budget math. So you need to get on the right path.

Offering you Wisdom on Wealth, I’m Byron Moore.

Argent Advisors, Inc. is an SEC-registered investment adviser. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request. Please See Important Disclosure Information here.


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