How To Gain Control Of Your Finances


Has anyone here ever worried about money? Am I alone?

Okay, great I’m not alone! All of us have worried to some degree about our finances; that just tends to be a part of living life.

In the world’s wealthiest nation, people still worry about money much of the time. Why is that? Why are so many people in America so stressed out about their finances? Let’s consider just how widespread the issue is.

According to a report published by Career Builder, nearly 78% of American adults live on a paycheck-to-paycheck basis. About three quarters of adult workers are in debt, and half of them believe they always will be. More than one quarter do not set any savings aside monthly.

And, get this: nearly one in 10 of those making over $100,000 are still living paycheck to paycheck. That’s simply insane!

Something is clearly wrong here, but what?

As an avid listener of the Dave Ramsey Show, I’ve come to learn that the true problem is the fact that most of these adults have no vision for their finances. They're just floating around day to day, month to month, and are not being intentional with their money. They have no goals, no self-control, and worst of all, no budget.

There it is, that “B” word: budget. It’s a word that scares many people, because it sounds scary and restrictive and un-fun. Well, you know what’s even scarier, more restrictive, and un-fun than a monthly budget? Letting your finances get a stranglehold on you!

For many, there is this aversion to budgeting. For some reason, they just don’t know how to take charge of their own finances. But in order to have a financially stable and satisfied life, a budget really is necessary. Let’s consider why this is.

Another term for budgeting is managing your money; it’s telling your money where to go, and dictating what you want your money to do rather than the other way around.

When you make a written budget, set allocations for certain categories and follow through with that plan, you’ll feel like you got a raise. When you take charge of your money and tell it where to go, it is much less likely to disappear on you.

Have you ever gotten paid and then two weeks later you wonder where all your money went? If so, it’s quite possible that you’re not on a budget and are spending like you’re in Congress. If you simply spend and spend, your money is going to end up controlling you, and you will be far more miserable than if you were doing a monthly budget.

Budgeting is less scary than you think it is! Trust me, I’ve been doing it, and it just works.

At a certain point in the month, you need to sit down and look at all your income (revenue) and expenses over the past several months. While looking at your bank statements, figure out which things are recurring and unchanging payments (phone, cable, Internet, mortgage, rent, etc). Those things can be put on auto-pay, as they are not changing month to month. What needs to change are other spending habits.

After recurring bills are calculated, look at how many other kinds of transactions are in your statement. Clothes shopping? Entertainment? Eating out? Random stuff bought on impulse?

If you see all those kinds of transactions, I’d bet that’s why your money is disappearing. Rather than just letting your money slip away, take control of it: make a budget for these things.

If you want to go out to eat occasionally, that’s fine. If you want to buy a few new clothing items each month, you can do that, but it must be done in a responsible way so that your money does not disappear. When you get paid, allocate some money to different categories, and only spend within those limits.

One can use an online budgeting tool, like Dave Ramsey’s Every Dollar, or a cash envelope system (what I use). Either way, when you do your monthly budget, tell your money where to go. Say to it, "You’re not leaving this slot," and tell yourself that you will not spend more than what is in that allocation!

Does that sound terrible to you? It might at first, but the alternative is even worse than taking some time to plan out your monthly spending. Budgeting requires self-control, discipline, and determination. Nothing good ever comes easy, and personal finance is no exception.

I can say from experience that budgeting has been the best financial decision I’ve ever made. In my household, we sit down monthly and go over everything that happened in the past month, and make adjustments as necessary. The plan offers us the ability to do the things we want to do without feeling guilty or falling into a pit.

So consider making a budget for yourself. It may sound scary and burdensome, but if you’re simply treading water in your personal finances, you’ve got nothing to lose and everything to gain by starting a budget. You'll feel like you got a raise and will be less stressed about money.

Comments (1)
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Wow, this is great advice @sconnell1791 But what advice can you offer to people who have more bills than income in a month? Like folks who are choosing between rent and medicine? Is there a strategy on how to manage deficit spending, even if it's short-term?