Take Control of your Money Men!

Learn how to become the Commander-in-Chief of your finances!

 By Mariam Khawer

Imagine yourself on a battleground. Your army of a thousand money men are right behind you, waiting to attack and bring home the enemy. Victory or defeat is all on your able shoulders. These men will either succeed and bring home the enemy’s head, or simply end up being spent.

You are probably wondering what battle-grounds and imaginary army troops have to do with Budgeting…

Well, simply put, you are the Commander-in-Chief of your financial stability. How you manage (budget) your army of money-men determines your financial health.

Budgeting allows you to draw out a master plan for your money which reflects your goals and priorities. While creating budget plans is great, what truly creates impact is effective execution. A budget that is religiously followed is essential in winning the battle with minimum damage to your resourceful army of money men.

The greatest challenge with budgeting is getting the approach right. “Your emotional brain responds to the word budget the same way it responds to the word diet. The connotation is deprivation, suffering, agony, depression.”

One of the main factors of budgetary failure is that the future benefits are often too difficult to visualize. According to HBR, patience and self-control are not easy to practice for most human beings. Owing to this, most of us seek instant gratification on a daily basis.

This is why you are tempted to dip into your savings from time to time. The part of your brain which desires material possessions can be very persuasive, but here are a few things that will help you stick to a budget, even when your willpower seems weak.

So how can you effectively take control of your money men? How can you ensure that you stick to your budget?

#1 Buddy Up 👬:

As per research, incentives and accountability are most effective in influencing desirable behavior change. The American Society of Training and Development (ASTD) found that people are 65% likely to meet a goal after committing to another person. Their chances of success increase to 95% when they set up ongoing meetings with their accountability partners to report their progress.

It really helps to have someone keeping you in check when it comes to your budget. This could be anyone, your family members, friends, relatives or your spouse.

You could set up weekly or monthly budget check-ins either in person on online. Reiterate your goals and confess your shortcomings. Having someone to report to can motivate you to do better and stay on track.

2. Break It Up 💰:

Perhaps you are craving a decadent meal at your favourite but you might have exhausted your entire leisurely budget in the first week of the month. If you normally eat out a few times a month it would be a good idea to divide your money into four weeks. This allows you to set a weekly spending limit. This will stop you from blowing your budget in the first week of the month. Even though many of the fixed expenses such as bills, utilities and rent are due monthly, variable  expenses recur more frequently and can quickly get out of hand, says Dan Ariely, a behavioral economist at Duke University.

A month is quite a period to keep your financial impulses under control, says George Friedman, CEO and founder of Qapital, a banking app that offers tools for customized saving. According to him a week is a better time frame during which it is easy to adhere to a financial regime.

“It is a manageable amount of transactions to look at,” Friedman says. “It is very clear this is the way to go since it is so easy to see previous weeks’ expenses and compare your progress from week to week.”

According to Friedman, since Qapital introduced a weekly spending target tool on their site users’ budgetary success has increased by 30%.

3. The Envelope Method ✉:

This is especially useful if you have a habit of borrowing money from one section of your budget and using it somewhere else. If you start the month with a spend now, save later mentality, or take money from one area and spend extra on the other, it will wreak havoc on your budget.

You can use the envelope system to curb this habit. At the start of each month put aside some cash in an envelope for various spending categories such as food, rent and entertainment. Once you have spent the entirety of an envelope consider all your money gone. Don’t allow yourself to borrow from here and there.

On-going tracking of expenses ensures your expenditure stays within the limits you’ve set. It is possible you come to realise some of the budgetary goals you have set are unrealistic or unachievable.  In that case it is perfectly fine to revise your budget and start anew.

If you’ve chosen a system that doesn’t work for you, it may feel like too much work to start over again, but don’t let that stop you. If you hit a bump on the road to a balanced budget, don’t give up! Take a step back and decide if the budget you’ve created is reasonable and allows enough breathing room. Remember to plan for your upcoming occasions and events in advance. If things still aren’t clicking, try out different budgeting systems until you find the one that works. A solid, well-maintained budget will allow you to be prepared for whatever the future may hold, and it’s worth the time to get it right.

Research has shown that since the 60’s, the personal savings rates in the United States have been inconsistent and generally declining. A recent poll reports that more than 80% of Americans are worried about their savings, with 7/10 apprehensive of whether they have enough money to cover their expenses.