Feb 232007
 

As some of the readers know, I’ve started experimenting with budgets lately. I feel the need to have more control over my spending. I’ve been doing pretty well so far by simply making sure to put away money into savings, but that’s was a very simplistic approach that worked best when I didn’t have monthly bills or as many expenses I have now.

Surprisingly, budgeting isn’t as painful as I thought it might be. See, I allocate money for spending on a whim, so I can actually spend that money without any guilt that I shouldn’t be spending any more money. I’m sure many of you sometimes feel guilty for "buying too much" or "spending too much money", and in my experience, budgeting ahead of time for fun/plan money has really helped me deal with that kinda guilt. And I also feel more in control and empowered. It also takes a lot less time than I thought I would. I also didn’t feel miserly or penny-county at all. Win/Win.

For those of you who’re interested in budgeting but may think its too constricting, you can try it out for a month. That is, budget for one month and follow your budgeted plan. Give yourself a break, the first time you create a budget is usually way off. You underestimate how much money you spend going out with your friends, or how much you spend on groceries. Don’t be thrown off by that.

At the end of the month, compare that month’s experience with ones where you didn’t budget. If you decide you like budgeting, then great! Keep it up! It’s a great habit to get into. If you’ve read The Millionaire Next Door, you’ll find that most millionaires have budgets. Smart financial planning is how they got to be millionaires in the first place. If you decide that budgets aren’t for you (perhaps they’re too complicated for your situation) then feel free to drop them. What’ve you got to lose? But you do have lots of gain, including money that mysteriously "disappeared" in previous months.

Some simpler/easier alternatives to budgets which I used before I started budgeting include:

  • Paying yourself first. As soon as you get paid (especially if you get paid on a regular basis), automatically have a certain amount of money taken out of your bank account to go into your savings account. This savings account could be for retiring early (compound interest is magical), paying for university, saving up for a vacation, whatever. Or you could further allocate your savings between all those things.
  • Figuring out how you’re going to spend each paycheque. This is especially valuable if you don’t have a regular stream of income, nor many regular expenses. This is a ridiculously fast thing to do; that is, it takes very little time. Say you just got a paycheque of 200 dollars. I know I’ve got a phone bill coming up that’s gonna be $30. I know I also wanna save at least $75 dollars for university tuition. I also know that I want to treat a friend of mine who recently had a birthday to dinner, so I’ll budget for that. And so on. The crucial thing is to allocate your whole paycheque, including deciding what to do with a chunk of cash after your regular expenses are paid for. You can just allocate that money to savings.

Here’s a great site that gives the best introduction to budgeting I’ve seen yet:

How To Create a Zero-Based Budget

That blog is just wonderful over-all. If it seems like it’ll take too much time or hassle to create a budget, you should see how much time, hassle and money it takes to not have one, by doing that 30-day trial I suggested earlier.

Have fun and get rich!

EDIT: After I posted, I noticed this entry:
Budgeting on a Self-employed or Irregular Income

It has some great info about being in control of your money if you don’t have a regular income, or are self-employed. Enjoy!

Feb 222007
 

Here we go again: Another post on just how much information is available for free or for nominal costs.

I just reserved a book at my local library system about multiple streams of income. I’ll receive an automated call when the item arrives at my local library and then I can go pick it up. Now, I don’t know if this book will actually give me some good ideas on how to create multiple streams of income, but if it gives me one good idea, then the cost of the book (in terms of time–since the book is free to borrow) is entirely repaid. In fact, it’s a great bargain.

I’m still amazed (and thankful) at just how many books and how much information is available to me at practically no cost. Besides the library system where I can borrow books, audiobooks and have access to their vast collection of periodicals (online and offline), as well as ebooks, there is also the Internet. For a very nominal cost, I can access tons and tons of information. And its not all about making money, a lot of it is about improving my present experience of reality and becoming happier in my life. Steve Pavlina‘s site alone has improved my experience of reality in such a way that its just ridiculous. Since I’ve gotten into PD (Personal Development), I’ve gotten two new jobs (and a lot more money), improved the quality of my relationships with my family and friends, improved my self-discipline enormously, improved my self-confidence greatly, have much greater clarity about the future, almost never have a "bad day" anymore, am a lot more upbeat and happier overall. Those are results I like! It’s nice to sit back and reflect on just how much growth I’ve experienced and how much I have improved my life.

If you have a problem or you want to do something, you can find tons of information on how to do it both online and by visiting your local library. Want to get richer? Improve your relationships? Improve your confidence? How about get healthier? Want to control your stress? Manage your time better? Become happier? Master your emotions? Want to get better grades? The information is out there. To quote David Allen, "It’s not about the information not being available to you, it’s about you not being available to the information."

As that quotation implies: information is just one part of the equation. I can know ten thousand different ways to make money, but if I don’t apply my knowledge/information, I’ll never make a dime. And I think this is why we don’t see a lot more ridiculously healthy and happy millionaires running around. The information is just the first step. Applying and actually using that information is the secondĀ  and absolutely critical step. And I think that is why. Application requires discipline, motivation, dedication, perseverance, the willingness to work hard and a host of other traits that aren’t exactly common. I might say (tongue-in-cheek, of course) that 20% of the population has 80% of the application power.

Since I know that I can and will apply a lot of the stuff I read, I’m amazed at the information being available and so few people taking advantage of it. I’m not going to get into why people don’t take advantage of solutions to their problems and choose instead to complain about them, however it completely mystifies me now.

Anyhoo, so that’s sorta my random thoughts on the topic. I just wanted to say that I’m really grateful that there is so much information for free (or nominal costs, such as the cost of an internet connection) is available to me. And I readily understand that this is the sort of opportunity I wouldn’t have been afforded if I was living in Pakistan or Saudi Arabia.