Income Is Your Line
In day 1 for Budgeting, I asked you to write your income. We write down our income so that becomes our baseline for how much we can spend. When you’re doing your budget, you must have a line or there really isn’t a point to doing one at all. If you’re willing to jump over your line, you’ll stay stuck in the same vicious cycle of not having enough money at the end of each month.
Expenses Are The Fat
The fastest and easiest way to get under budget is to trim the fat. Your expenses are the fat in your life. When they are not watched carefully they can go right past your income line. That is when we tend to pull out the credit cards or have massive overdraft fees at the bank.
After you have all of your expenses lined out in categories for what you spend each month, see if anything jumps out at you. If one category is higher than expected, trim the fat. If you have an eat out expense of $1200 in a month and you can’t actually afford it, cut that cost down big time. If you buy a lot of shoes or books or whatever, find a way to cut it down.
You can find ways to cut your budget expenses. It’s up to you to be willing to do this though.
Income >= Expenses
Now that you’re cutting the fat, make the expenses lower than the income. In your typical budget, you’ll want to make income equal expenses. Today, I want you to cut the expenses even lower. You’ll see why tomorrow when we talk about sinking funds and savings.
This can be a process, but I know you can do it. It takes some dedication and willingness to get out of this overspending cycle. You’ll see it’s worth it in the long run as you start telling your money where to go instead of wondering where it went.