Often, when people hear the word budget, they associate it with restriction. I know because I hear this from my clients all the time!

The word “budget” has a bad reputation so, I understand the inclination to shy away from it. But the reality is that budgeting doesn’t need to feel restrictive at all! In fact, you’re more likely to succeed with your budget if you create a plan that aligns with your values and offers you comfort and flexibility.

Here are 4 things you should consider when creating your budget so you can stop dealing with financial stress and take control of your money.

Your income

Reviewing your income is one of the first steps in creating a realistic but comfortable budget.

Many people don’t know how much money they’re bringing in each month, which of course means they’re more likely to overspend.

One of the first steps in making sure you have more control over your money than it has on you, is bringing awareness and clarity to your income.

When you have a clear idea of your income you can set up a budget that is mindful of it – ensuring your expenses don’t go beyond how much you’re bringing in.

If you aren’t happy with your income, work to change it! Get a one-off job or side-hustle, ask for a raise, or sell some of your items, to supplement your regular income.

Your values

As Jane Claire Hervey writes in Forbes, what you spend is what you value.

However, when you first start looking at your expenses and where you spend money, these two things might not be aligned.

Write down what you would describe as your core values: family, relationships, career, health, spirituality, etc. Why are these values in particular important to you?

Then, take a look at your spending habits and reflect (without judgement) on where you’ve been spending your money recently.

Compare the two lists. Do your financial habits reflect what you value? If not, there’s a good chance that you’ll never feel satisfied with your financial status, regardless of the amount of money in your bank account.

To start recalibrating, use your values as a guide for how your budget should look. If you value family above all else, instead of spending money on another handbag or a new home decor item each month, set aside funds for a family activity.

It will take some time to readjust so give yourself grace here! Also remember that your values can change with time, so be sure to evaluate this list regularly.

Your wants & your needs

In a similar way, it’s important to distinguish your wants from your needs. When you’re analyzing your recent spending, how do you feel?

Were the purchases you made well thought out or impulse decisions? Were they things you needed and are still grateful you purchased, or did the excitement wear off after a few days?

Our world is full of temptation, and it can be easy to get sucked in to marketing tactics, trends, and purchasing to “keep up with the Joneses.”

If you’re truly looking to take control of your finances, it’s important to begin to recognize what purchases are worthwhile, important, and things you genuinely need, compared to things you want or feel the need to purchase in the moment.

This isn’t to say that you can never simply purchase something because you want it, it’s just about being more intentional about it!

When creating your budget, first determine how much your “needs” cost you each month. Then, see if there’s room for some “wants.” Leaving room for both means you’ll be more likely to stick to your budget because it doesn’t feel as restrictive!

Your goals

What are your personal, financial and professional goals? Do they involve retiring early? Becoming debt-free? Owning a home? Map out the goals you have for the next few months or years.

Know that these goals won’t be achieved overnight, they take small steps over a period of time. So, start now!

Craft your budget keeping these long-term goals in mind and commit to putting money aside each month in support of these larger goals.

Yes, it might be harder in the moment to avoid impulse spending but when you recognize how much more fulfilling it will be to achieve your bigger goals, saving becomes a lot easier!

Cutting back in certain areas gives you space and room to grow in other areas – the areas that are more important to your desired lifestyle and future.

Final thoughts

I hope this post helps you recognize that setting a budget doesn’t have to feel restrictive. In fact if done well,  it will actually give you a lot more freedom and opportunity! If you’d like help preparing your budget or getting more clarity on your finances, please feel free to reach out to me by booking your free consult call.