3 Practical Steps to a Winning Budget

5 October 2020

A budget, for most people, is usually a spreadsheet that lives somewhere on a computer or in a cloud drive, created once and never touched again.

So why do we have such an adversarial relationship with a tool that is supposed to help us?

The adage says that if a hammer is your only tool, then every problem looks like a nail. This is also true of our perception of a budget. Our perception and relationship to a budget is one of restrictions, but it doesn’t have to be.

A budget is not a spreadsheet that you draw up once, or even once a month, it is a process, and here are 3 practical steps to help you create a winning budget.

Step 1: A compelling why

It is not only easier to set up a budget if you have a compelling reason to do so, but it is also far easier to stick to your budget if your “why” is big enough.

If your goal or reason for setting a budget is to become debt free, think about what it would look like and what it would feel like.

If you would like to save money for an overseas holiday, does it look like the turquoise waters of the Mediterranean, the hustle and bustle of New York City, or sitting at a street café in Europe?

With this in mind you might want to create a book for your budget and find pictures of your dream destination, the sights that you want to see and the attractions that you want to experience, and stick them on the outside of your budget book, as a reminder of why you are doing it.

But what if your reasons are not physical, will using pictures still work? Yes, but with a slight twist. If your goal is to be debt free, what would that bring for you, a good night’s sleep, no more phone calls from creditors following up on missed payments? Use images that embody this.

You can even do a before and after. These are your goals and dreams, be creative!

If you are not visual and want to see the numbers on a spreadsheet, print it out, and place it in your budget book.

Step 2: Track the results

Seeing your progress is very motivating. It builds enthusiasm and momentum – so the second step to creating a winning budget is to track your results.

An effective way to do this is to have a visual barometer. There are many creative ideas on the internet, from having a picture of a pie chart and colouring the slices as you move towards achieving 100% of your goal, to simply having 2 bars next to each other, one for the goal and one showing how much you have achieved.

If you are number oriented, you could draw up a table showing each month, the total amount you saved (or still owe if being debt free is your goal) and the change from the previous month.

Step 3: Phone a friend

Starting is easy. The motivation is there, the excitement is high. Over time the enthusiasm might fizzle out, especially if the weight of life’s realities is giving you a bit of a rough time.

If you are accountable only to yourself it is easy to just give in to the pressures of the world and fall back into your rut. This is where friends and family come in. They help you to remember the “why” and stay on track with your goals.

So, find that friend that will help and support you when things get tough and progress is slow. Not only will they help by reminding you of your dream, but if you and a friend would like to take that holiday together, why not motivate each other to keep going.

In addition to this, if you tell your friends that you are working towards a goal, they are less likely to tempt you into spending money by dragging you to sales or sending you the latest iPhone updates. It is also much easier for you to decline such offers with a simple “no, I’m sorry I can’t go with you because I’m saving for my holiday to New York”.

Get out some pens, paper, scissors and glue, phone a friend and set up that Winning Budget today.

Acknowledgment: Johan vd Merwe

Take the first step towards focusing on your personal finances