I wanted to do a post on money management today as it has been something that I have been thinking about lately.
Being a young professional, I have always heard that it is important to follow a budget. However, what does a budget really do for you? Sure, there are some positive consequences of making a budget. Some of the obvious consequences are the ability to see where you are spending the most money, spend less money, and make sure that you do not spend more than you earn. All of these are good things but after a couple months of following this budget structure left me feeling hallow.
During the course of these budget monitoring months, I felt like I was missing something. I still became worried about my finances and where my money was being spent. Then, one day I realized something. I was working my budget. Maybe, my budget needed to start to work for me.There was something missing from my budget. Was it enough now to follow this standard formula that my mentors have told me for several years?
For me, this answer was no. I have big dreams. Dreams of having a decent car, a nice house, and the ability to pay for my future children's college. One solution I turned to was reading. The amount of information out there is amazing. There are so many experts with their own ideas and opinions.
It was not until I found a book by T. Harv Eker (Secrets of the Millionaire Mind) that I felt like I could start to see how my budget was being underutilized. Eker pointed out several things in this book, but one chapter really stood out to me.
Eker describes how to divide your budget into 6 different accounts to provide you the ability to make more use of your money. Without going too much into these accounts, they are necessities, blow (spend) money, charity, education, financial future, and long-term savings. These accounts give you micro budgets that focus on the amount spend in each account rather than each purchase.
So far, I have started using this account for the last 2.5 months. I have found myself putting more money into my savings, happier because I am spending more on enjoyable purchases, and satisfied because I am donating to charity.
In the future, I hope that this budget will continue to translate and adapt as my life changes.
How do you feel about your budget?