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The most successful people in life understand the importance of planning, especially when it comes to money. Those "get rich quick" schemes you always hear about rarely work. And, even when they do, the suddenly wealthy person is just as likely to spend all that money and become broke again.
Why is that? Because they never made a plan for their money. In other words, they never made a budget.
Now, I know what you’re thinking: Ugh, the dreaded "B" word. Sure, creating a budget and cash flow plan doesn’t really sound like much fun. But doesn’t it sound like more fun to go on a vacation with friends or family and come home without worrying about credit card bills and debt?
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That’s what you can do when you make a plan for your money—one that involves dumping debt, cutting up credit cards, and living debt-free. You’ll give up on your money goals much more quickly if you don’t have them written down.
So how do you start to make a plan that works?
#1: Figure Out Your Income for the Month
Start by determining how much money you have to work with for the upcoming month—before the month begins. This includes your income, your spouse’s income and any extra income you and your spouse are bringing in.
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#2: Make a Zero-Based Budget
Next, spend every dollar on paper, on purpose, before the month begins. Of course, you can also make your budget online with our free online tool, EveryDollar. You see, every dollar should have a name. This is called a zero-based budget, and it works. When you’re planning for the month ahead, you should be able to subtract your expenses (outgo) from your income to equal zero. When you’re done writing the budget, you shouldn’t have anything left over—that’s why it’s called a zero-based budget!
#3: Make Budget Adjustments
Third, remember that a good plan changes as your life changes. This means you’ll need to review your budget each month as the year goes on to make adjustments. If you budgeted too little in one area, then adjust. If you budgeted too much in another area, then adjust.
If you’re new to budgeting, it might take a few months to get the hang of it, and that’s okay. But, soon enough, you should have a budget you can rely on.
Remember, a budget isn’t about complicating your life. It’s about knowing where your cash is going and making your life a whole lot easier.
A budget isn’t about complicating your life.
That’s why this idea of making a plan for your money is one of the seven important habits I talk about in my upcoming book Love Your Life, Not Theirs. If you’re interested in developing habits that will cause you to win with money for the rest of your life, then preorder this book now to receive $70 worth of free bonus material with your book!
Rachel Cruze is a seasoned communicator and number-one best-selling author, helping Americans learn the proper ways to handle money and stay out of debt. Her upcoming book Love Your Life, Not Theirs will release in October. You can follow Rachel on Twitter at @RachelCruze, online at rachelcruze.com, or at facebook.com/rachelramseycruze.