The B Word

You likely have to deal with the B word at work. Those of you in the for profit world are quite used to cutting, measuring and arguing for them at least annually. And those of you in the non-profit world are likely blaming Bush or some other "mean" Republican because you had "cuts" and will therefore, like every other business, have to pick your priorities.

Figured it out yet? Today's post is about BUDGETING! Are you pumped yet? I'd guess that somewhere around 80 to 90% of LMF4HMW readers don't have one. (And that's probably a conservative guess.)

Would you run a business without a budget? Of course not, that would be irresponsible! Then is there even one good reason to run your life without one? (Unacceptable excuses: "I don't feel like it." "I hate money talk/numbers/finance." "I'm suddenly coming down with the flu.")

I'm not suggesting that you spend an hour creating a budget, but I am pleading with you to give it 20 minutes of your time. Hell, you're the one producing the revenue. You should at least know where it's going! This can be done in a few simple steps:

1. Write down your monthly cash inflow --"revenue" from your job(s), etc. (Assuming this is net or after you've paid taxes, contributed to your 401k, etc.)

2. Write down your fixed monthly expenses -- rent/mortgage, car payment, school or other loans, car and renter's/homeowner's insurance and dues, utilities, etc.

3. Make a list of your other monthly cash outflows -- gym membership, cell phone, gas, groceries, maid services, beauty appointments, credit card payments, etc. (Being online with a recent bank account statement is helpful at this point.)

4. Record any other outflows you've forgotten -- think hard! There's always more. Restaurants/bars, trips, gifts, investments, etc. These are obviously dynamic expenses but a good estimate is better than nothing.

5. Add outflows from #s 2-5 to get your total monthly cash outflow.

6. Subtract your total monthly outflow from your inflow.

If you have a positive number, congrats! (You're still not done, but you can go open a bottle of Syrah -- I had an awesome one from Melville last night.) If you are staring at a negative number, the good news is that you're about to take your first step in turning this into a positive one. The reality (not calling it "bad news" because whining about it doesn't help) though, is that you have to make some hard changes. NOW.

The easiest place to start is the items you recorded in #4. I love dining out, but it's a very fast way to lose $100! (Your thing might be shopping or an expensive activity.) If you've cut all of that or you didn't have anything there to cut, move to #3. Do you really need two gym memberships? Maid service? Two facials a month? Get the final #6 positive.

The point is, you need to determine how much you can spend and stick to it. Everyone's number will be different. It's all about prioritizing.

In taking control of the situation, you gain power. (And likely better shut eye.)

PS - Be sure to revisit this at least annually -- a good time is when you have your work review and hopefully get a raise. Put it on your calendar. You owe it to yourself. Being in control of your pursestrings is hot!