“The slightest adjustments to your daily routines can dramatically alter the outcomes in your life.” – Darren Hardy
"Money is a terrible master but an excellent servant." - P.T. Barnum
"A budget tells us what we can't afford, but it doesn't keep us from buying it." - William Feather
The process of learning how to budget is just frustrating enough, that most people give up before they ever really have a chance to get good at it. I often say, it's just enough like rocket science to make you throw your arms in the air and walk away.
Over the course of 10+ years of coaching people through the twists and turns of personal finance, I've noticed one HUGE reason that causes people to quit before they develop this all-important muscle of budgeting.
This one thing throws them sideways and scrambles their brains to the point of just walking away and it's actually 100% preventable.
What is this "one thing", you ask? Overwhelm. Overwhelm is the biggest budget-killer of all time.
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In my decade-plus time as a financial coach, I've witnessed that overwhelm is the most cumbersome obstacle for most people when they're going through the process of learning how to budget. Overwhelm is the destroyer of many a budget and financial life and it's sad because its totally conquerable. And, there's one simple mindset trick that beats it every time.
"But how can I conquer this overwhelm", you ask?
Well, the answer is actually two fold:
1. Breaking things down into bite-sized, highly ingestible pieces and
2. Going through what I call the "pre-budgeting" step.
And today we're going to dive deep into this pre-budgeting step as an example of breaking your budgeting learning process down into smaller, more ingestible, less overwhelming pieces. But first, let me buttress in your mind why budgeting is such an important and, I would argue absolutely essential, life skill.
By the way, if you want a downloadable PDF that will guide you through this all-important process, you can get that by clicking here: The Forgotten Budgeting Step (aka "Budget Insurance") Downloadable PDF
OR by clicking the image below:
The Forgotten Budgeting Step
"Why is budgeting success important?", you ask. I'm no statistician, but I can tell you that, every single one of our financial coaching students (hundreds at this point) who have successfully paid off their debt say that it's "IMPOSSIBLE" to do it without a budget.
That's right, all of them bar none, say that it’s NOT POSSIBLE to win with money without living on a budget. No matter how smart we think we might be or how much we “got this”, more often than not, an actual, detailed, written budget will prove us horribly wrong.
SO, that said, setting up the budget and purposefully rewriting it every month, staying on top of expenses, those are incredibly important.
BUT, the one thing that most people miss in this process is the “all important” pre-budgeting step of listing out all of your bills, expenses and debts, organizing them by date and THEN plugging them into the budget.
This one, seemingly “unimportant” step serves the purpose of breaking what can be an incredibly overwhelming process (i.e. learning how to budget) into smaller, bite-sized, more manageable pieces.
So let’s jump into the pivotally important “pre-budgeting stage.
(i.e. making a list of all bills, expenses and debts)
Don’t worry it’s normal. Rome wasn’t built in a day and MOST of our students don’t remember ALL of their bills, expenses and debts the first time through.
If you’re prone to overwhelm, I highly recommend breaking this exercise into 25 minute time blocks. Here’s a free 25 Minute Time Block Strategy resource that will tell you how to do that.
Start by “brainstorming” all of the bills you can remember. The following steps are meant to get the wheels turning and to help you find all the “nooks and crannies”
You may want to print off a couple of copies of the "Everything I Owe" PDF Worksheet as you will likely rewrite by “due date” after your 1st draft “brainstorm”.
Also, as a way to “jog” your memory, go ahead and download our Budget PDF Form. The categories may help you to remember things you might otherwise forget.
Make sure to include “due dates” with every expense you write down. We’ll organize them by date later in the process. This part is all about “getting it all down on paper”.
Gather up all of the following you can:
Bank statements and log into all of your online banking accounts.
Credit card statements and log into your online accounts.
Mortgage/2nd mortgage/HELOC/HOA statements.
Car payment stubs
Student loan statements
Personal loan statements
Utility bills (electricity, water, sewer, gas, pest control, internet
Insurance invoices (home, car, health, life, disability, identity theft)
Car maintenance, oil change receipts.
Travel related expenses
Medical related expenses (doctor visits, chiropractor, medications, supplements)
Irregular expenses like: gifts, back to school, seasonals
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Again, set that timer for 25 minutes if you start to feel overwhelmed and take a break for 5-10 minutes and then get back at it.
Don’t worry, it’s not going to be perfect the first time. Remember, this is just the first draft and it will get more and more accurate the more times you rewrite it (just like budgeting).
Here's a "livestream" session I did that walks you through this process in the context of the 2020 financial crisis.
Don't be afraid of rewriting. Rewriting is a hallmark of all steps of the "learning to budget" process. Shun, the "set it and forget it" mindset. It will not serve you.
Instead, resolve that you're going to do "whatever it takes" to become successful at this and I promise you, you will!
You can learn more about how to actually budget at this blogpost and/or by watching the video below.
And again, if you want a downloadable PDF of this blog post, you can get that by clicking here: The Forgotten Budgeting Step (aka "Budget Insurance") Downloadable PDF
OR by clicking the image below:
The Forgotten Budgeting Step
So hopefully I've convinced you that adding this pre-budgeting step will dramatically increase your odds of becoming a wildly successful budgeter.
This follows the general principle in personal finance of taking steps to reduce overwhelm by 1) breaking things down into bite-sized, highly ingestible pieces and again, mores specifically 2) going through what I call this pivotal "pre-budgeting" step.
I've also hopefully buttressed in your mind why budgeting is such an important and, I would argue absolutely essential, life skill. If you ever want to win with money, you absolutely have to be on a budget and I want to help you learn how to do that almost more than anything in the world! :)
All of this consumption of content is great, but it's nothing if we don' put it immediately into practice in some way. If you hang out on my platform for any amount of time, you'll see that I'm big on "calls to action". Here's what I want you to do:
Go ahead and download this PDF that will guide you through this all-important process, you can get that by clicking here: The Forgotten Budgeting Step (aka "Budget Insurance") Downloadable PDF
Also, as an ongoing means of supporting your personal finance goals, I want to encourage you to:
1) subscribe to our YouTube channel for ongoing strategies and encouragement and
2) go ahead and join Zero Debt Tribe, our private Facebook community aiming at helping you to connect with others, to get your questions answered and to stay the course.
As always, please don’t hesitate to reach out to me at: [email protected] when you have questions, need help or just need someone to talk to during this difficult time. We love you, want the best for you and are here for you during this time.
Next, let's talk about how my free and complete system to master your money for good!
0. Stop All Retirement Investing (Until Step 4)2. Starter Emergency Fund of $10003. Eliminate Debts Smallest To Largest (a.k.a The Debt Snowball)4. Full Emergency Fund of 3-6+ Months’ Expenses5. Invest A Minimum of 15% Income Into Retirement Accounts (and increase savings rate to 50%+ if possible)6. College Funding (if applicable)7. Pay Off The Home Mortgage8. Build Wealth, Serve, Be Ridiculously Generous And Go FI (Financial Independence)!
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