We’ve all had that dreaded emergency spring up. Your account is drained of cash. Your heart races. Your mind is reeling trying to come up with a solution. We have all been there.
The best way to avoid this scenario is to have a budget. Do not stop reading. I know we all hate that word “BUDGET”. I know that budget has a negative connotation. You have probably started sweating at the mention of the word budget. In all reality, your budget should be your best friend.
All thriving businesses have a budget in order to be successful. You are running a small business and need a budget. Managing your personal finances is, in reality, the same as running a small business. You have income, expenses, and want to make a profit. Same as any small business. It is time to become friends with your budget.
Simple steps to create your successful friendly budget.
- Gather all financial statements for the last 2 months (bank statements).
- List your income for that period.
- List all spending (in detail) for that period.
- Rent/ House payment
- Regular bills (credit cards, insurances, child support, cable, cell phone, etc)
- Transportation/ gasoline
- School supplies or education
- Use simple math to see how much cash is left over. Income – Expenses = Extra Cash
- Extra cash goes into your emergency fund. ($1,000 is a good start)
How do you grow your Emergency Fund faster?
- Keep a money diary. Write down everything you spend so you can see where your money goes. Cut out some of the discretionary spending and put that into your emergency fund. There are many apps and programs that can help you do this.
- Sell items you no longer need or use. This can be done through a yard sale, Craigslist, eBay, Facebook Market place, and even the classifieds.
- Set up an automated savings. Setup automatic direct deposit (or transfers) so money goes directly into your savings account every pay period (learn how to pay yourself first).
- Meal plan. Use one cheap meal each week, like the $5 Meal Plan to help you save money. Put the money you saved into savings.
- Make more money. Start a side hustle and commit to saving all proceeds from your chosen hustle. (This is what I do by blogging.)
Right here I want to emphasize that creating a budget and saving money does not mean that you have to stop enjoying life. If you love going out to eat, keep doing it! If you love buying clothes, keep doing it! If you love traveling, by all means keep doing it! Your friendly budget allows you to continue enjoying those things with out the stress of taking away from your necessities.
One last thought I want to share with you before leaving you to run your friendly budget is to be forgiving of yourself. None of us are 100% perfect. This is not an excuse to not do your best, but more of a statement to allow yourself time to work out the kinks.
A friendly budget takes time, just like any new friendship.
Next time that emergency raises its head you will smile and reach into your account to take care of it because the money is there.
I believe in you! The easiest way to success is one step at a time.