One of the most important components of our overall financial wellness is living by a budget that’s in line with our values and goals. Budgets, or as I like to call them, ‘happiness allocations,’ are a very basic concept but when used correctly, can set us up to live a very happy life! Why?
We spend within our means
One of the most critical parts of a budget is knowing what money is coming in and what money is going out. We aim to spend less than we earn. Not only does this prevent us from accumulating debt or burning through our savings, it’s one of the best ways to reduce financial stress! It’s not a good feeling to spend more than you have.
We allocate to what’s most important
At any given point, we have a certain amount of money to spend either from our job or an allowance from our family. When we spend this money in a certain way, we lose the option to spend it on something else. When we take an honest look at how we are spending our money, we have the opportunity to change or continue spending as we are. We get to decide what’s most important to us and how our money can support what’s most important to us. That’s powerful! We can maximize the happiness we get from each dollar we spend.
We know what’s available for our goals
Even more than spending within our means, when we have money leftover after supporting our lifestyle, we can use that for various savings goals. We might want to save up for a vacation, a new house or apartment, put it toward a wedding, or save up to invest in our own businesses. When you think about it, all of our life goals have a financial component. We either have to support ourselves while achieving those goals or there is money required to pursue them. This is why our financial life is a part of our overall wellness. When we have a budget, we can figure out how much money we have available to allocate to each of our goals each period and then can even figure out when we will have enough money to achieve them!
If you want help creating a budget (or happiness allocation) that doesn’t feel restricting and supports what’s most important to you, sign up for my 30 Day Money Cleanse that starts today! By the end of the 30 days you will walk away with a comprehensive budget that you can stick to that supports your most coveted goals.