Do you ever wonder why some people are so successful with money while others, often including ourselves, have a tougher time? Sure, hard work or even sheer luck might have something to do with it, but even those things don’t guarantee success.
Take others out of the picture and think about your own situation. Chances are you probably want to do a better job at managing your money. You might need to start a budget or plan a more realistic one, which is often easier said than done when you have children who are growing like weeds. But there are so many budgeting tips out there, where do you get started?
The bottom line is you need to have your money work for you, instead of the other way around.
And before you think I’m going all financial-planner on you (because that’s so not going to happen), I want to share a very simple budgeting tip that can make all the difference in the world when it comes to having success with your finances.
I know because it’s worked for me and my family. And I can almost guarantee you that it’s something anyone who manages their money well does too.
Let me start by sharing our story…
About 10 years ago, Nate and I found ourselves with a mountain of debt. Though some things were simply bad luck (for lack of better terms), I had a money-spending problem.
We lived paycheck-to-paycheck and in a constant state of stress about our finances. On top of almost maxed-out credit cards, we had virtually no savings; if something big happened, we would have been in huge trouble.
One time, our only reliable vehicle needed a new transmission and there was no way we could pay for it. Fortunately, my dad was extremely handy and ended up fixing it with parts he paid for himself. But it was a big wake-up call that we needed to get our act together.
Then we heard about Dave Ramsey’s Total Money Makeover. We bought his book and were amazed at the stories of people who had dug themselves out of debt to become financially free. But could we do that too?
We weren’t sure, but we didn’t exactly have a choice, so we jumped in. We severely restricted our spending (thankfully we only had 2 kids at that point) and poured everything we possibly could toward paying down our debt.
It worked. With determination and a lot of hard work and sacrifice, we paid off all our credit card debt (over $20k) and our car loan (another $15k) within 3 years. We became debt free, aside from our mortgage.
It felt amazing. We moved on to our next goal, which was to fund our six months emergency fund, and saved about 3/4 of it.
Then some unexpected large expenses derailed us. Things like our health insurance changing just before Luke was born and resulting in bills close to $6,000, instead of the $250 we had been planning for. Some other things happened too and while we still remained debt free, we lost the momentum we’d had before.
A few years later, we are still debt free (aside from our mortgage), but we haven’t moved forward with our finances in quite some time.
I began thinking about how much we’d accomplished a few years ago and, by contrast, how little we’ve done recently.
What was the difference? Why were we so successful before compared to now?
I was struck by a very simple realization: previously, we had clearly defined goals, but recently? We haven’t set goals.
With anything in life, if you don’t set goals, you’re not going to move forward, at least not as effectively. It’s no different with paying off debt, saving money, or improving finances.
With this simple budgeting tip in mind, Nate and I sat down together last month and determined what our next steps need to be. We recently learned that we’ll need to have our furnace replaced soon which will cost us about $10K. Our first goal is to save that money entirely before July, when we hope to have it installed. Yes, it’s a bit daunting, but now we know exactly what we need to do. And in order to do that, we’ve set up a strict (but hopefully realistic) budget that we intend to stick to.
Will you join me?
Put this very simple budgeting tip to work for you and figure out your financial goals.
List them all out, from the small to the big ones. Then start with the most pressing goal. It could be saving $500 in an emergency fund, paying off credit cards, or saving for a large expense that’s looming on the horizon. Maybe you want to save more in your children’s college funds. Or take a trip to Disney World! (<<That’s definitely not happening for our family though!)
Write it down. Then you can figure out what steps you need to take to be successful.
My husband mentioned that it would be cool to have one of those goal thermometers to track our progress and I agree with him. So I had this handy “Goals” tracker created for both you and me!
Click HERE to download your free printable “Goals” tracker sheet.