Budgeting

In the middle of February 2017, Bankrate asked 1,001 Americans about how they would spend their hard-earned 2016 tax returns. About 610— and mostly millennials— replied that they planned to either save it or pay for their debts with it. That was a smart decision. However, this can only mean that the other 391 people did the exact opposite. That was not their best choice. That is a lot of potential savings for the future. If you find that with your money you tend to behave like one of those 610 people, Visa has created your solution: a comprehensive monthly budget worksheet. This worksheet is divided into three distinct sections. The first section outlines your total monthly net income (after taxes and other expenses;) the second lists your everyday expenses. Finally, the third details your loans, bills, and other fixed expenses. Just subtract the third section from the other two and discover how much money you can take to the bank. If you do not think that you are one of those people, you may be correct— but before you settle your judgment, consider the following statistic.

This May, LearnVest asked 1,000 different Americans about their vacation plans. Unfortunately, 490 of them were millennials who would risk going into debt for their vacations; 370 Gen-Xers thought the same way. Among a whopping 740 of those participants, the average vacation debt amounted to $1,108. That is more money than what thousands upon thousands of Americans can even begin to imagine. Vacations are great and all, but having money for yourself is much better in the long run. Remember that monthly budgeting chart from earlier? Use that to make sure that you do not get yourself into the same problem, even if you think that you are already good with money. According to a recent Gallop poll, between 2008 and 2015, millennials had been spending less money per day at the grocery store— meaning about $13 less per day than other generations had during the years prior to the study. You can be smart like those millennials were— if you stick to your budget plan, of course.

Now, how exactly can you stick to your budget plan? First off, you need to have a plan that works. Do not worry, because I am about to describe to you a simple and beneficial budget plan, and if you commit to it and also constantly update your budget worksheet on Google Docs, then you will surely be good to go.

Here is the first step for my budget plan. Do you have a job? Maybe a better question is— do you have any money at all? If you do, then count it out. Go to the bank and ask for your balance. If you have a job, look at your paychecks in order to see how much income you are earning. Now, I want you to think about these next two questions as you look over your money: what necessities do you really need, and what are the other things that you really want? It is important to be as accurate as you can possibly be, because the first step in my budget plan is to write a list that answers each of those questions every month. But for the list of things that you want, you should also think about why you want what you want, how those things impact your everyday life, and most importantly what are the most vital things that you want?

Yes, even in the list of things that you want, there are still things that you need more than other things. At first, this will seem difficult, but you can trust me when I say that it will be worth it in the end. You may even find that this process will help you realize where you can cut back on your spending— so you do not end up like those 391 people who splurged on impulse buys instead of saving it or like those 740 vacationers who dove into thousands of dollars of debt rather than into a swimming pool. This realization ties in closely with the second step in my budget plan, which has you draw clear guidelines. This is why you need some of the things that you want. I cannot stress enough that Visa’s monthly budget worksheet will work financial wonders for your spending and saving habits.

The final step in my simple budget plan is to continue to find how you can cut back on spending and start saving instead. Imagine if those vacationing families had saved that $1,108 in their accounts. They could have let it add up over time and gotten to use this budget plan, along with Visa’s monthly budgeting worksheet, in order to reap the benefits. How does that work exactly? It happens through a process called “compounded interest.” For example, a 13-year-old from one of those vacationing families from earlier happens to deposit $1,108 (earned from allowances, of course,) into their savings account with a compounded interest rate of 3%. At around the same time, he gets a job and starts to add $100 to his savings account each month. By the time he dips into his savings account at the age of 21, he amasses $3,032.68. If he keeps on doing the same thing every year until he turns 35, he will have a grand total of $6,412! Does this make you feel better about having a budget plan? If not, then you may be thinking that having a budget plan makes you feel poor because you have to watch your money. That is far from the truth. At least you have money with which to budget.

Jim Carrey used to live with his entire family in a trailer. Ten years later, he was earning $20 million for his acting— that is a lot of money. But how? He had a budget plan— in a way. As a child, he worked hard as a poor comedian and factory worker in order to earn money for his family. He kept working hard and tried to earn money as an actor and comedian. For ten years he struggled, but he had a secret weapon that would help him in the end: a check that he had written to himself for $10 million, “for acting services rendered.” That sounds like a funny thing to do just to keep up his self-esteem, but actually, he looked at it every day as a reminder of his past and as a guide toward his more successful future. Of course, Jim Carrey is a household name as he has starred in various films and television shows. Remember how I said that he had a budget plan but I did not describe Jim Carrey using a worksheet to plan out what he spends and what he saves? He used a method that I would strongly recommend— if it made Jim Carrey successful, it will definitely help you too.

Laminate that monthly budgeting worksheet and get an erasable marker. Hang the worksheet on your wall, or on your bed, or in your kitchen. As long as you give yourself a way to constantly envision your worksheet, just as Jim Carrey did, you can constantly envision your goal. Your goal is to budget your money properly and assure that you have enough to avoid sinking into poverty.

However, Jim Carrey and I agree on one thing: do not, under any circumstances, become rich and famous. He said once, “I think everybody should get rich and famous and do everything they ever dreamed of so they can see that it’s not the answer.” What? Being rich and famous is not the goal? No… the goal is to have a happy constancy in your life, and to be happy with who you are instead of hitting a peak and wishing for more. In order to do that, you need to budget your money so that you can live the life that you want to live; it is not all about possessions, but money is still going to be a factor. Help your family, or donate to charity, but always pursue your true purpose in the world.