The Definition: There is a HUGE misconception about the word “budget” and what it means. The dictionary definition of the word budget is “an amount of money available for spending that is based on a plan for how it will be spent”. I want to point out the key words of this definition:
Rich people (or people who are debt free, can pay all their bills every month and have extra to spend on whatever they’d like) are rich because they make money and don’t spend it ALL. This is an extremely easy concept that has somehow been lost on most people in their 20’s.
- Tracking how much you spend AFTER you spent it is NOT A BUDGET (I made that mistake for 2 years before I finally figured it out).
- A budget IS a spending limit set BEFORE the money is spent.
Everyone, from the hourly paid worker to the multi-millionaire, is on a budget. Each budget looks different, but it’s still a PLAN for how their money is SPENT in relation to their INCOME.
Follow the Leader: One thing that Dave Ramsey talks about that really resonates with me is the type of people to follow. He says that you should learn from the people who have already made it. For example, if you want to learn how to get rich, talk to a rich person. If you want to learn how to lose weight, talk to a thin person. Sometimes in our 20’s we decide to follow our friends, most of who are not on a budget and not spending their money in a way that will eliminate debt now and build wealth in the future.
I Love my Budget. I love talking about it, looking at it, working on it, fixing it…everything! I’m proud to be on a budget that is helping me reach my financial goals and become debt free 24-25 years sooner than my loan term indicates.
Get a Written Budget: If you want to be in a different place, financially, get on a budget and be proud of it. Maybe you want to feel like a “balla” and buy a car with cash in the next two years. Maybe you want to save up for a down payment for a house. Maybe you want to be debt free. Maybe you want to build your savings account. Whatever it is that you’re trying to do financially, you CANNOT DO WITHOUT A BUDGET! It won’t happen!
“A budget tells your money where to go instead of wondering where it went”. –Dave Ramsey