Three random topics that seem to have nothing to do with each other, but I would like to propose that one thing ties them together – if not handled correctly, all of them can cause unnecessary financial stress.
“Okay, Chris, I understand the other two, but how can breakfast cause unnecessary stress?”
I understand the question; before I answer that one, let’s begin with the value of a Budget.
Although statistics show that well over 70% of people in America will go to sleep tonight stressed out about their finances, when I bring up the subject of a budget, I get push-back. While most of us would like to make some kind of change in our personal finances (see our previous blogs that speak towards how to make changes in our current circumstances), very few these days seem to be willing to pull the trigger on those necessary changes.
Let’s get back to square one, in dealing with personal finance: how much money do you make? and how much money do you spend? Answering those two questions is an excellent first step towards decreasing stress and increasing person control in our financial lives. Once you know how much your family brings in every month (make sure the amount is after-tax), you have a starting base for telling your money where to go.
The next step is writing down every bill that should be paid monthly, along with every debt that your family needs to pay. This ends up being a difficult step because it carries the same emotional feeling as stepping on the scale when you know that you have some weight to lose. It’s much more comfortable to stick our head in the sand and pretend that everything is alright – this self-deception ends up being the root problem of our financial stress. Get on the scale – write down everything that is owed every month.
The next step is harder: for the next 30 days, every family member needs to write down everything they spend… every penny, whether on the card or with cash. If you aren’t aware of where the water is leaking, you have no way to fix the leak. This is where the idea of “Breakfast” and “Breakdowns” come into play.
Because most people have no idea how much money they spend every month and where the money goes, it’s very easy to “slide the card” and buy the occasional breakfast, lunch, snack, or drive-through. Marketing and credit card companies have made it easy to spend money without thinking about it, and therefore, we do exactly that – spend without thinking. Because of the lack of foresight, a simple habit of sliding the card for breakfast a few days a week ultimately causes stress, because we end up wondering where our money went instead of us telling the money where to go. When we nickel and dime ourselves, we make the excuses that “we have no money to put into savings” for the eventual Breakdown.
Emergencies will happen – breakdowns of the vehicles, the body, or the washing machine – and whether we are prepared or not, they will increase our stress level. If we nickel and dime ourselves on “breakfasts” or other small spending habits, we won’t have any money saved for “breakdowns.”
While I will write a few blogs on this topic over the next few weeks, I wanted to give a basic premise of the idea – Budgets are important because they put you in control. Money slips through our hands, primarily due to poor planning and self-deception. A budget is a tool that helps us confront brutal reality, decrease the stress that emergencies can cause, and can provide us the freedom to live the lives we are called to live – as long as we keep our head out of the sand.
Remember: 30 days… write down every breakfast, so you can prepare for the breakdowns that will eventually come.
Chris Craft
The Soapbox 
Fantastic blog post, Chris! Are there any applications, programs, or other tools you would advise readers to use in order to create a budget?
LikeLike
Micah, I can definitely do that. There are several programs and applications that people can use, based on their particular personality and preferences. The most important thing about choosing a program is to DO IT! The most dangerous thing is to think about it, look at choices, and let a year go by. Choose one and sell out to it, because most likely (if you choose well), the people who wrote the program have the results you’re looking for.
The program that my wife, Laura, and I chose is the Financial Fitness Program through the LIFE Leadership company. It is a very holistic program (meaning that it doesn’t only cover the Defense of finances – cutting back on expenses – but it also covers ways to increase your income and invest wisely) and that’s something that mattered to us. We have eliminated over $120,000 worth of debt from our lives and are learning how to leverage systems to increase our income.
The most popular ones would be Dave Ramsey’s Financial Peace, Crown Financial, Suze Orman, or even your local bank (However, personally I’m not a fan of receiving financial recommendations from an organization that makes money off my debt, but to each his own). Again, the most important thing is to make a choice and have long-term vision – make the right choices over the long-term.
LikeLike