Do I need a Budget? Yes, we will get to budgets in a moment, however let’s set the context. Michael Jordan (my favorite athlete ever) was at one point in his career considered just a scoring machine- yet as his career evolved, he became much better at defense. So much so that he was a 1st team All-Defensive player 9 times.
MJ did the drills and practice necessary to become better even though he was already great at offense. If MJ can do the drills to improve his defense, so can we.
So, Do I Need a Budget??
In Personal Finance, the first thing you need to do, and that I did was to make a budget. I know, budgets suck. We don’t do them anymore really, I monitor them and know about what we spend, but we no longer track every dollar.
However, we did initially so we could get a handle on where the money was going. You also need to know what you spend on a monthly and yearly basis. You need to track EVERY DOLLAR!
It can be tedious and boring, but like MJ you have to put in the work upfront to educate yourself and understand where your money is going. Every month is like a Profit/Loss statement, did I make money this month? How much?
You may realize that you are fine- you may already be making more money than you spend and have leftover to invest. Or you may realize that you have a problem, and you are bleeding money out and on a fast track to bankruptcy.
How do I put together a budget? There are a number of free budget ideas online, paid budget, we used excel spreadsheet, you can use pencil and paper, whiteboard, etc! One thing that makes it easier is to use a credit card to purchase everything on. If you get into debt easy and prefer it, then a Debit Card will suffice just fine.
Only use a credit card if your finances are under control- the last thing you need to add on is high interest debt.
Quick Money Saving Tips:
The hope is that you notice a few things you can do to curb your spending and get your finances in line. A few ideas to consider:
Subscriptions: Do you really need Pandora Plus or Spotify premium? You can’t listen to a 15 second ad? Do you need a gourmet meal delivered to your doorstep because you are too lazy to cook? Beauty boxes every month? Clothing boxes?
High Interest Debt: What does your debt look like? Do you have credit card debt? Student loan debt? Medical debt? Please tell me you don’t have high interest payday loans, rent to own appliances, etc. For context, when we were really saving, we paid $60 for a hand washer and a clothesline rack and used them for about a year or two. While I don’t advocate for anyone else doing that unless they want to; we were not going to do the rent to own thing or drive to a laundromat every few days. What can you do to pay off your high interest debt and avoid getting more of it?
Cable TV: This is a big one, some people I have seen are paying over $250-$300/month for cable with HBO, Hulu, Netflix, etc! You want to play financial defense like MJ- cut this out! I haven’t paid for cable TV for over a decade.
I know this is controversial, let’s look at it mathematically first: $300/month invested at a 7% return instead of paying someone else for cable will turn into around $325,000 after 30 years. Some articles show that the average 60-year-old has $175,000 for retirement. By giving up cable, you could double that if you never did anything else!
If you have bad debt, you should cancel your cable today. Replace it with a HD Antennae, you can buy one for around $20, that should grab you the local stations for free. Free PBS for the kids, and football on Sundays, with movies and prime time shows for free as well. Watch highlights on Youtube, and the Superbowl is always streamed for free online.
Here is a link to the one I would buy if we had to buy ours again. We bought ours in 2016 and it still going strong! $20 over 5 years vs $15,000 over 5 years? Easy choice.
Note: This is an affiliate link- if you decide to purchase this via my link and support this blog I will receive some compensation to keep the bills paid.
Once you are in a better position financially, and you want to dip your toes back in the water, not only would I recommend looking at streaming options for $10-$30/month that will get you some of what you want, but also you get the new customer special!
A Secret Place That Saves Money…
If you are big on movies- I know a place where there are hundreds of movies for free! Want in on the secret? OK, but promise not to tell…
The Library. My kids love picking DVDs to watch from the library. It’s like they get to experience what Blockbuster was for us… on a much smaller scale. You would be amazed at what some of your local libraries have for free- Books, DVDs, Blu-Rays, Video Games, kids’ programs and clubs.
Learning to play defense is using your resources. I’ve highlighted a few things you should take a look at. Each case is going to be unique, however take a look at your own finances and do a gut check. How do you get this under control to where you need to be! Remember, financial defense wins championships