THE BLOG

Did You Say the 'B' Word?

07/09/2013 03:40 pm ET | Updated Sep 08, 2013

Budget. There, I said it. Don't hate me. It's the big bad "B" word. It's one single word that causes grief, pain and a sudden sense of nausea. Talking about the "B" word is like riding in a boat, getting seasick, and remembering that you forget to bring your Dramamine. It's a never-ending out of control feeling. Can you relate?

I've joked about forming a "budget-anonymous" club for some time now. However, my club meetings won't be filled with sullen faces in the look of despair. In contrast, my meetings will be filled with good food and happy faces of people who have finally overcome the "B" word dread. Why do you ask? Well, because I have a black belt in tips and tricks to stay on track every month so you can finally master the "B" word.

"Shannah, I really need your help. I can't understand why I have this really successful business but I can't get it to grow, and don't even get me started on my personal finances, " says a frustrated client as she points to her balled up mess of paperwork in the corner of her office. "Ok, well, let me ask, do you have a budget?" I asked. Oh no... here it comes. Can you feel it building? She lowers her head, closes her eyes and says, "I used to, maybe 10 years ago, but I threw it out because it doesn't work." Houston, we have a problem.

Brokedown budgets are common, unfortunately, and I see it all too often. I get called in when the SOS signal goes off, but luckily with some surefire tips, we are able to mend your broken budget together.

Where Do I Start?

1. This may seem like the most ridiculous place to start, but I find it's often the best place to start -- RENAME IT! You don't like the "B" word; I never really have either, then call it something different. I love to travel, so I've renamed mine, "My Travel Itinerary". The idea is to subtly trick your brain and get it programmed in a positive manner. Find your own language that works for you and I promise you will notice the change in your mood immediately.

2. There are many budget templates and apps out there for you to use. There is also nothing wrong with a good ol' handwritten budget as well. This doesn't need to be complicated; just follow this set up:

a. First, list your INCOME amounts -- all income including rental, scholarships if you are in school, self-employment income, etc.

b. Second, list all your expenses broken down by FIXED, and then VARIABLE. This is an important step and you need to be completely honest with yourself here. Exhaust all your expenses as best as you can. Some of the key expenses that I see missing that will certainly break down your budget are: ATM withdrawals, parking fees, unexpected trips to CVS/Rite Aid type stores, magazine purchases, and extra meals out that weren't expected. It's easy to see 15-30 percent over your budget just in these categories alone.

Ok, That Seems Easy, Now What?

3. Now that you've got all your income and your expenses down, it is time to add two columns to your budget: BUDGET and WHAT I SPENT. Completing these should not take you more than 15-20 minutes every month once you have your budget template set up properly.

a. The BUDGET column is a forward-looking column anticipating your income and expenses for the next month. You should complete this column at least a week before the end of the month. It's a guesstimate based on your past month's income/expenses, but aim for as much accuracy as possible.

b. The WHAT I SPENT column is really the secret to turning your budget around and never again having a break down. This is a historical column to be completed at the end of the month. Scrub through your bank account statements and credit card statements. Put all the expenses in their categories and COMPARE the two columns. This will show you exactly where your budget is breaking down. The key is to take this information, alter your budget the next month, and aim to come out as close to even on every category.

If you completed these tasks, you are armed with a great budget template and you have a strategy to manage it properly. We often tend to make easy tasks super complicated to the point of complete frustration. Look, I know it's never easy to grab a magnifying glass and take a long look at your expenses and income. However, I want you to know that you can master this and you can succeed no matter what the numbers look like. Make a promise to yourself and don't let the "B" word drag you down ever again!

Have any questions, email me at shannah@shannahcompton.com