A Battle Plan for Budgeting

Do you ever feel stressed about money? Unless you're a prince or a preschooler, the answer is probably yes. For many, it feels like there’s never quite enough to go around. The constant need to make tough decisions about what to forego can leave you feeling like you’re not truly in control of your finances.

But when you need a bit of inspiration, look no further than the front of a one-dollar bill. George Washington, the first president of the United States, and the commander of the rag-tag Continental Army during the Revolutionary War, faced a similar challenge. He never had enough soldiers, yet by making a strategic plan, he led his army to victory against the world’s most formidable fighting force. You can take a cue from Washington and become the commander-in-chief of your own finances.

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Budgeting: Your Battle Plan

Each dollar in your account is like a soldier in your army, and your battle plan is your budget. While the word "budget" might make most people want to run for cover, it’s essential for financial victory. A 2016 Gallup poll revealed that only 32% of couples keep a written budget. But just as a general wouldn’t make up battle strategies on the fly, you shouldn’t handle your finances without a plan.

Many people view budgeting as predicting future income and spending. However, the most effective budgets focus on the present—because you can’t command soldiers you don’t have. Your “army” is the money currently in your bank accounts, and as the general, it’s your job to assign every dollar a specific task.

Spending Wisely: The March Orders

Let’s say you have $10,000 across all your accounts. Your first step is to decide how much of that you’ll spend this month and how much you’ll set aside for savings. To do this, you need to understand your current spending. Print out your last three months of bank statements and categorize each expense into five categories:

1. Essentials: These are non-negotiables like rent, utilities, groceries, gas, car payments, and health insurance—anything you need to live or work.

2. Security: Expenses that enhance your financial stability, such as building an emergency fund or paying off debt, fall into this category. But don’t double-count—if you use a credit card for essentials, categorize it under essentials, not here.

3. Goals: This category includes money set aside for big life goals, like saving for a house, starting a business, or funding a dream vacation.

4. Lifestyle: These are expenses that help you maintain your social life, such as personal grooming, gifts, gym memberships, and pet needs.

5. Discretionary: This is your treat-yourself fund—money for dining out, entertainment, or indulgent purchases like a new video game or a spa day.

With your expenses categorized, you can start assigning your soldiers to their tasks for the coming month. Even if you have money left over after covering essentials, don’t let those dollars sit idle. Decide on their mission—whether it’s building an emergency fund or saving for that Hawaiian vacation. Savings with a purpose are less tempting to dip into.

Making Your Budget Stick: Strategic Tips

Congratulations! You’ve created your first month’s budget. But how do you ensure it sticks?

1. Write It Down: Whether you use a spreadsheet, an app, or pen and paper, it’s crucial to document your budget. No general ever won a war by keeping all their strategies in their head.

2. Update Regularly: Conditions on the ground change, so reassess and update your budget at the start of each month. You’ll likely have new “soldiers” (income) to deploy in your financial battle.

3. Leverage Technology: Use budgeting apps to keep track of your spending in real time. These tools are especially helpful for managing discretionary spending, letting you know if you can afford that extra treat.

Winning the Financial War: Less Stress, More Happiness

So, how do you know if you’re budgeting correctly? The clearest sign is reduced stress. Imagine enjoying a night out without worrying whether you can afford it. Picture checking your account balance without holding your breath. By introducing more clarity and control into your finances, you can significantly improve your mood and overall well-being.

The ultimate goal of budgeting isn’t just to accumulate more money—it’s to be happier with the money you have. By adopting a disciplined approach to your finances, you can achieve a sense of control and satisfaction that’s priceless.