Your Budget Workout

Working out is a routine part of my life. I tend to try out different routines in order to keep me from getting bored, but I have to find a way to at least be in the gym a few days a week.

And it’s not because I love it.

I surely don’t like being around all those grunters and self observers. Note to gym rats: the mirrors are for making sure you are doing the exercise correctly, not to see if your hair still looks good.

But back to the reason I work out. It’s not because it’s a passion for me. It is because I love the feeling afterwards.

The feeling of accomplishment for the day and just the feeling of being healthy. When we are in the gym, we tend to do our body good. And when we stick to routinely being in the gym, we enhance the benefits of working out.

Working That Budget Out

Who likes to budget?

Really, who likes to sit down and figure out if they have to cut back spending? Spending is fun, grasping reality can be difficult.

For me, budgeting is similar to working out.

Getting started on a budget, and even the process, is brutal. However, the aftereffect is extremely positive for me. Having a game plan provides more structure to my life, and helps me understand exactly what I need to do to accomplish my financial goals.

That’s healthy.

It’s healthy in a different respect than physical health. It’s called becoming financially healthy.

Understanding your body, taking the appropriate vitamins and working out, keeps your body healthy. Similarly, understanding your finances and taking appropriate measures to keep them in check keeps you financially healthy.

A Budgeting Regimen for Anyone

In order to provide some people a fresh start with their budgeting routine, here is a step-by-step budgeting routine that will be sure to get you through the process. And, even provide the “feel good” feeling when you are done.

Exercise 1 – The Warm-Up

Sit down and open your computer. For the old schoolers, open a notebook and grab a pencil

Exercise 2 – Easing into everything

List your income from every source and amount. This could be two jobs, a main job and a hobby, etc.

Exercise 3 – Break 1

Stand up and walk to the fridge and grab your favorite beverage.

Exercise 4 – The Heavy Lifting

Sit back down and begin listing all of your expenses

Ok, I understand this may be heavy lifting, so get a spotter.

Exercise 4 SPOTTER

Pull out the three most recent credit card or debit card statements.

Start categorizing the type of spend each transaction is.

Example: The transaction at Exxon would go under gas, the Ruth’s Chris transaction would go under food and the Al’s

Fine Wine transaction would likely go under discretionary (maybe food).

Fill in amounts for each transaction within each category

Add up the amounts within each category for each month and then take an average.

BOOM! You have an expense starting point!

Exercise 5 – Break 2

Stand back up and return to the fridge for another serving of your favorite beverage. You deserve it.

Exercise 6 – Easing off the heavy lift

We need to finish the expenses. Don’t forget rent, utilities, insurance… all the items that may not be found using our spotter for the heavy lifting.

Exercise 7 – Cool Down

Now sum up all of your incomes and all of your expenses.

Exercise 8 – Break 3

Be sure to take this break and go and grab an extra one of your favorite beverage from the fridge.

Exercise 9 – The Burn

Take your income and subtract out your expenses (income – expenses).

Understanding the Burn

Don’t rush to the ice pool to take care of the burning sensation. This just means you had a great work out.

If you find that when calculating your income minus expenses that you get a negative number, then it is time to: GET TO WORK.

We need to take a look at our spending and determine what our highest expenses are. Then, we need to determine if there are ways to reduce those expenses.

Maybe we need to stop eating at Ruth’s Chris every week, or instead of buying Jordan wine, we look to buy Meiomi (my favorite). Adjust your current spending and set these new levels as your ongoing budget. Stay true to them.

If you find that when calculating your income minus expenses that you get a positive number than it is time to: GET TO WORK (no, that’s not a typo).

Just because we had a positive burn (positive free cash flow), we can’t just stop. We have goals that we want to accomplish. We want to buy our own home, get that debt paid off or buy the love of our life a nice diamond ring.

Accomplishing our goals means we need to start saving our free cash flow and, thus, not spend it. That’s work in and of itself. Add these goals to your budget line items and routinely check in to make sure you are staying true to them.

Wela's Late Night Special

When thinking of workout regimens, I tend to think of those late night infomercials… 6 Minute Abs or Better Biceps in Just 10 Minutes.

In honor of this feeling, we put together a rough outline of a budget to help you with your routine. Hopefully, this allows you to get to the good feeling end point sooner than later. You can see it here - Personal Statement.

But be sure to take all the breaks, as they are necessary pieces to feeling good when the budget is done.