In case you missed it on our Facebook page last week, there was a nice little write up on our clan, NYC budgeting ways, and OFB on Forbes.com. If you’re interested in checking it out, click your mouse right here.
After reading the article, we realized there’s a lot of nuance to budgeting and our budget in particular. From budgeting apps to tracking methods to our Everything Else category to backwards budgeting, there are countless ways to optimize and customize and hack a budget. And if you’ve been going at it successfully for some period of time, that’s a good way to make the most of your money.
But it’s also pretty complicated. What if you’ve never been able to stick to a budget? Or what if you just don’t get it? What if you’re just starting out? All those extra hacks and optimizations are just garbage. It’s fluff. So if you fall in this camp, or if you need a good reminder about what it is you’re doing every month, this short post is for you.
This is what a budget is made of:
- Projected income
- Projected expenses
- Actual income
- Actual expenses
The end. Seriously, that’s it. You’re estimating and setting goals for your money and then comparing that against what actually happens.
Seeing a budget for what it actually is might help you create your own system. The only “right way” to budget is the way that actually works for you. So get rid of all the preconceived ideas of what your budget needs to look like and how other people do it. Just take those four ingredients and figure out a method that works. There’s more than one way to skin a cat. (I could write a whole post about the troubling questions this idiom prompts [Why are you skinning a cat? Are you going to eat it? Is this common? Common enough for people to turn this into a common saying? Where do these people live? Is our cat safe? Where’s Persie?], but I’ll spare you.)
By the same token, if you’ve tried to keep a budget before but failed, it means you were struggling with one (or more) of these four things. Maybe you were projecting your expenses wrong. Or your actual income wasn’t enough to cover basic projected expenses. Or you weren’t able to stay up to date with your actual expenses. So while it’s easy to chalk it up to some elaborate reason, it really boils down to one of these basic components.
So let’s start there. Which of the four budgeting components is your greatest pitfall/struggle/roadblock/hurdle?