In my first budgeting attempt, I set the right financial goals and was motivated to reach them. I changed my money mindset and began saving money. I cut expenses and was contributing 12 percent of my salary to my company’s 401(k) plan. However, I found myself not achieving most of my goals and I still didn’t feel in control of my money. I believed my budget was ineffective. I felt like a failure, so I abandoned the spending plan.
Over the years I’ve learned that I was not alone. My family and friends, along with countless people I’ve met, understood the importance of having a budget, and some of them had taken the time to create a budget, but they had either failed to implement the plan or to stick with it long term.
At an event in Lowell, Massachusetts, I had a conversation with Leo, a mechanic and single father. Leo had taken an important step by managing his finances with a budget, but he was still unsure of how to execute his plan.
“I have a budget, but what do I do next?” asked Leo.
“It’s time to use it,” I responded.
“How do I do that?” he said.
A lot of time is spent explaining the importance of budgeting and going through the steps to create a budget, but the lesson falls short in teaching people how to execute their budgets and integrate them into their daily lives.
Leo, like many others, is left to figure out how to make a budget work. A budget is only valuable if it’s executed and can only work if it’s ...