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Balanced Budget, Balanced Life: Setting Your Financial Priorities

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Liz Weston offers strategies and techniques that can help you build a budget that works.
This chapter is from the book

Many people don’t plan their spending. It just sort of happens.

But what we spend on the basics—where we live, how we get around, what we wear, what we eat—can have a profound effect on the quality of our life. So can the amount of debt we’ve taken on. If basic expenses or debt eat up too much of our income, we won’t have enough left over for the fun stuff—vacations, entertainment, and other experiences that make life worth living. And if we spend too much today, we won’t have a cushion to protect ourselves from an emergency tomorrow or to sustain us in our old age.

A budget can be empowering. We’re wresting control of our spending away from advertisers, lenders, and mere impulse. Instead, we’re directing our money toward what’s truly important to us. A good budget also helps balance our competing priorities so that we’re enjoying the present while building security for the future.

Read on for strategies and techniques that can help you build a budget that works.

How to Stick to a Budget

Q: How do you stay on a budget? I have tried several times, and it never works. I’ll buy something on impulse or to take advantage of a sale, or friends will call and ask us to go out for dinner. My friends complain that I’m tight, but if I were so tight, I would have a lot more money in the bank. We are in our 40s, and I feel we are not where we should be at this stage in our lives. Plus, I am always thinking about money. How can I get a budget started and stick to it so we can finally see some savings?

A: Wouldn’t you like to stop thinking about money? Or at least, when you do think about it, to feel calm and in control, confident that you have enough, that you’re making progress toward your goals, and that you can handle any setbacks likely to come your way?

Managing your money well gives you the power to achieve what you really want in life while dialing back the anxiety that plagues people who live paycheck to paycheck.

Budgets tend to fail when people view them as an awful exercise in deprivation instead of as a tool to help them stop wasting money on things they don’t really want so that they can get the things they do. When you view your spending plan in this light, it’s easier to skip those sales and invitations.

You might want some inspirational reading. Your Money or Your Life, by Joe Dominguez, Vicki Robin, and Monique; Tildord, MoiqueTilford (Penguin Books, 2008) would be an excellent beginning. This book, which is the bible for the voluntary simplicity movement, can help you understand the connection between the choices you make every single day and the bigger financial picture that makes up your life. (Savings tip: Check it out at your local library or buy it used online.)

Most importantly, let go of ideas about where you “should be” at this stage. You are where you are. Regrets about not having more, or not being able to spend more, can lead you to chuck the whole idea of a budget. Many people overspend by trying to buy the lifestyle they think they should achieve instead of being realistic about what they can actually afford.

You also may find it helpful to seek out a support group of people who are trying to get their finances under control. You might join an online forum, such as http://simplelivingforum.net, for inspiration and tips.

You can do this. Good luck!

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