Category Archives: Finance

Budgeting is Not Boring: 30 Days to a Frugal Lifestyle

Posted on August 24, 2009 | 2 Comments

I say this emphatically: Budgeting is not boring.

What makes budgeting boring for some people is that a lot of us don’t have the correct knowledge and experiences when it comes to budgeting. For example, if you went to a bowling alley and, because you had no idea how to bowl, every time you’d throw the bowling ball it would go in the gutter, then bowling would be pretty boring too right? It’s the same with budgeting. If you know the right way to do it, you gain positive experiences and budgeting can become fun. You see results (more money in your bank account) and this is definitely a fun thing!

What happens is that you start to feel accomplished in your new routine of living on a budget and the benefits that it entails. You may even look back at the “bad old days” when you used to spend your cash wildly and look back not too fondly! You take a look at those old bank statements and wonder where all the cash went.

What your new budget-conscious mindset will give you is new opportunities to do fun things in life without having to run over to the ATM machine every other day for a fresh infusion of cash into your wallet. Does frugal have to equal being bored? Not necessarily.

In order to get your new budget-conscious mindset right, I suggest you track your budget for the first few months. You can use either standard pen-and-paper or you can use any of the assortment of computer programs for this (Mint.com, Intuit Quicken, etc). After some time following your budget (again I recommend at least a couple of months writing everything down) you can think about dropping the written records and not having to write every expenditure down. The human mind takes a minimum of 30 days to get used to any new mental habit, so make sure you don’t give yourself any leeway during that first month or two to deviate from your planned budget! Once you get comfortable with your budget, you’ll be able to figure out how much you’re allowing yourself to spend on any particular category and how much you’ve already spent, all by heart. One of the big tips about fighting temptation during that first month is that whenever you feel an urge for something not budgeted (ex. new LCD television) remember what you’re saving for (ex. winter trip to Puerto Rico), imagine yourself doing that and walk away! Then replace that “urge” with something constructive (ex. watching the sports game at a friend’s house).

The bottom-line is that in order to budget effectively, you must have “budget-awareness”. This means you need to be aware of how commercial society influences people’s spending habits and you must fight these urges. A huge contributor to our materialistic culture is television – studies actually demonstrate that the more that a person watches television shows, usually the more that person will spend. Television constantly bombards the viewing public with messages of ultra-luxury beyond the grasp of the common middle-class, leaving the majority of people in debt trying to “catch up with the Joneses”. Even your friends and neighbors may affect your spending habits! Try to develop friendships with people also trying to build a debt-free frugal lifestyle in order to support your new ways. Remember that budgeting and frugal living doesn’t have to be forever – remember to reward yourself for your good work following your budget and reaching your goals!

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Living on a Budget Means Awareness and Possibly Throwing Your TV Out The Window

Posted on January 11, 2009 | 1 Comment

To live a budget lifestyle, you need to be aware of your financial choices. You need to be aware of your unconscious and conscious decisions to spend money and you need to be aware of how people close to you want you to spend your money.

Advertisers are perfectly aware of the messages they are bombarding you on a daily basis. These messages are tailored to do one thing: persuade you to spend money in the way they want you to. Marketing and advertising executives spend their days discovering new and innovative ways for you to spend money on their products and services. That’s the whole point of advertising and marketing! What’s more, advertising and marketing has been around since the beginning of time and we’ve been doing our own form of advertising and marketing even if we don’t realize it. Think about finding a love partner – you need to market and advertise yourself. Every single successful business uses top-notch marketing and advertising teams to sell their products and services. Even if you’re going to a job interview, you’re going to be marketing yourself as the best option for the hiring company. The only difference is that many companies have million-dollar marketing and advertising teams working for them!

You’re going to need to be able to consciously sift through the many messages you receive regularly and then ignore the messages trying to persuade to buy a product or service you don’t really need. One of these negative messages you’re going to have to block out are “jealousy messages”. This is where that phrase “Keeping Up With the Joneses” rears its ugly head. Who cares about the Joneses? The truth is that most people look at the neighbor’s new Hummer and they feel like they have to get one too. They go to a friend’s home and they notice their friend has a jet ski, so they need to get one too.

Where does that impulse to spend and spend come from? One of the biggest culprits is from television, specifically television shows. Researchers have found that most television shows (with the general exception of comedy sitcoms) are set in the world of the upper class. The average income person watching these shows feels an urge to get some of those items featured in the show. Maybe you’re watching one of these MTV reality shows with uber-rich people driving their $200,000 cars and Armani clothes. Maybe you’re looking at an ultra-sleek living room in a television show, you look at your own living room and you start feeling inadequate. The research showed that the homes that had the highest rates of viewing these shows had the lowest rates of saving money. Possibly these households spend all their cash on consumer goods and don’t have money left over to save? Food for thought.

Television commercials are another big culprit. Commercials are designed to make you feel like you absolutely need to have items that the typical household can’t afford. Commercials cause the average household to compare their lives not with others in the same economic bracket but instead with those at the very highest income levels.

I’ll tell you right now the absolutely easiest way to disconnect from this pressure. Here’s a step-by-step for you:

1. Get up from your couch. Put your beer/soda down at the coffee table.
2. Walk over to the television.
3. Unplug television.
4. Pick up television.
5. Walk to window with television.
6. Open window.
7. Throw television out the window.

Ok, maybe you don’t have to throw your television out the window… you could just unplug the television. Or you could just watch the occasional movie, not watch television, and read a good book instead (and yes, you can actually learn from books! Unlike television, which is generally mindless entertainment….). You could meet with friends and have a good time. You could take a walk with a loved one.

The bottom-line is to not put yourself in situations to get tempted! Think about it this way, if you’re trying to lose weight, would it be prudent for you to have brownies and ice cream in the refrigerator? I know some are going to think my suggestions are ridiculous. Some might think there’s no way they can reduce the time they spend with their “best friend” – the television. I would prefer you eliminate it from your life, but if you can at least limit your watching to a little bit a day or week it’s best. Even better, try to only watch educational channels, like Discovery Channel. I personally do my best to watch educational and enlightening seminars on DVD that I’ve rented from Netflix so I can learn something. Of course, I love watching comedy movies as well. It’s all about moderation and remembering that life isn’t just about distraction – it’s about living your life to the fullest!

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How to Reward Yourself While Living on a Budget

Posted on January 5, 2009 | 2 Comments

One of those universal truths about budgeting and saving money is this:

Some of life’s greatest rewards are free.

Rewards and fun activities don’t have to cost tons of money. Your idea of a cheap thrill may be spending some time reading a book in the park near where you live, sitting in front of a fireplace with a loved one, or having a late-night session of Monopoly (or my recent favorite Apples to Apples) with friends.

This means you watch your money grow and still have fun doing it – what a concept! Seriously though, you may end up finding out that the things in life that really do make you happy aren’t found by maxing out your PayPal account on eBay or in your local shopping mall. By changing your spending habits, not only will you be getting your bills paid off but you’ll break that horrible habit of running up those bills in the first place!

A lot of people mistakenly believe that only middle-class and poor people have to budget and save money, rich people just spend and spend and don’t have to worry about that sort of thing. It actually couldn’t be further from the truth. The rich actually tend to save money much more often than other income levels – which is a major key to their financial success. This means that if you want to be taken for a rich person, make deposits more often in your savings account and other investments and less on luxury items.

I’ve noticed there seems to be two types of spenders: big-time spenders and those that waste their money away a dollar at a time. We all know how big spenders waste their savings away. That huge SUV, that enormous plasma television, etc. The other type of spender spends their money consistently a little bit at a time on relatively meaningless items. Let’s say you’re rushing out late to work, so instead of making your own coffee, you buy a $5 frappuccino at Starbucks. Then at lunch you’re bored, so you buy a $4 Sports Illustrated magazine. Then at night, you head out to the local nightclub and spend $22 on a couple of drinks plus $20 cover charge because you forgot to get on the guestlist. You add up these little expenses – that seem like nothing at the time you’re spending it – and it can make the difference between having more money at the end of the month or more month at the end of the money. One of those ways you can counteract this tendency is to write down all your expenditures – this allows you to see where your money is really going.

By taking the steps to live on a budget, you’ll be living a higher quality of life. I know most people think that spending money on frivolous luxury items equals a better life, but a lot of times it actually may mean the opposite. You’ll have pride in knowing you can handle your personal and family finances and never feel afraid you may be revealed to be financially incompetent. You’ll be able to watch the server at the restaurant run your credit card through the machine without having to be worried it’s going to get rejected. You can sleep great at night without being worried about how you’re going to pay that impossible bill. You can live in a home where money isn’t issue because you’ve compromised on a budget with your partner. You can feel secure that if a financial emergency comes up you’ll have the reserves to deal with it. You can give yourself little and big treats once in a while, without feeling any of the guilt of thinking you really can’t afford that item. You can feel comfortable in knowing you can look forward to a peaceful retirement.

The bottom-line is that getting a budget together and living according to what you’ve outlined in it can give you a peaceful night’s sleep and a positive view of the future. Don’t feel like budgeting and living on a budget means you’re depriving yourself! By living within your means and having money left over at the end of the month you can afford those little treats and not feel like you have to deprive yourself. Most marriages end due to husbands and wives fighting about money – so get started now to live on a reasonable budget. Do it not just for your sake, but for the sake of your loved ones, and for the sake of your future.

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