Get excited about the recession!
Now you have a reason to learn how to budget!
Managing money well is a skill that is beneficial in times of plenty and in times of lack. However, these days of uncertainty can force us to figure out how to spend and manage our money wisely. There are a few simple actions that you can take to turn your financial life around over time. The key word here is time. It will take time, and lots of it, before you see results. It's just like anything worthwhile, really. Take working out, you can work out for weeks, even months without seeing any results. But when you do, you realise that all of your hard work was worth it.
So, know that there is no get rich quick scheme that actually works. The time tested principles of money management are the only thing that will keep you in the black for the rest of your life—regardless of what the economy does.
Look at this recession as a opportunity to learn the skills that will help you build a fortune over the rest of your adult life.
You will love to budget.
When you start to budget, you can't imagine your life without it. Seriously!
Four years ago, if you were to ask me if I thought budgeting was a good idea I probably would have given you a blank stare. Either that, or I would have said "No!". My personal philosophy of money was, "Money is for spending, you can always get more!". That was the philosophy that had me racking up secret debt on my credit cards that my wife had no idea about. Not a good plan.
I changed my ways.
Now, I am a firm believer in budgeting. Having a plan before the money comes in is so critical to building wealth that I cannot believe that I ignored it for so long. The great thing is that when you start to budget, you feel like you got a raise! Why is this? It's simply because you are clogging up the "holes" where you money used to leak out of. When you don't have a budget it's really hard to see where your money goes. I know this first hand. If you are anything like me, you are more prone to many small purchases than extravagant items. This is almost more dangerous! You can easily feel that your spending is not out of control because it's just a Big Mac here and a Latte there. Don't fool yourself! These little things add up. When you create and stick to your budget, suddenly, all that money is finally accounted for and available. It is truly amazing.
Your basic budget
what you need to do at the beginning of every month
Before the month begins you will want to write all the money that you are expecting to come in. If you are married, it's a good idea to do this with your spouse. Now, write down all of your household expenses. Put what you plan on spending for the month under each expense. Use a zero based budget. That means that you need to spend all of your money. Consider saving as spending—a bill that you must pay, first! To quote Jim Rohn, "Rich people invest first and live on the rest. Poor people spend first and save the rest". So, save your money first. Make it a priority. Save at least 10% of your income before you do anything else and you will see huge benefits within the first year!
Keep at your budget for the long haul. You will only see results if you stick to it. Always have a plan at the beginning of the month and save before you spend. Get out of debt as fast as you can and make saving and investing a habit—instead of buying Big Macs.