Personal budgets are a little like New Year’s resolutions. At the time your intentions are as pure as the driven snow, but a few weeks later you can barely remember what you committed to in the first place. How many times have you set up a personal budget and failed to follow through with it (or even just managed to keep it up-to-date). Your heart is in the right place, but there is a real reason why you haven’t been able to knuckle down and work the plan you set out.
Want to know what it is?
The incentive isn’t big enough to keep you motivated
“What’s in it for me?” It’s a good question. It’s also a question you haven’t answered.
Why should you spend hours of your spare time setting up a personal budget and making sure you stick to it? You have a million different things going on during your day, taking out more time to keep track of your daily or monthly spend seems like real “admin”. And who has time for more “admin”?
The trick to getting the most out of someone (including yourself) is to dangle a juicy carrot in front of them.
If I asked you to stay behind after work to finish a job that might take all night, my request would probably be met with some degree of contempt and a general look of displeasure wouldn’t be difficult to spot on your face.
“Who the hell does he think he is, asking me to push an all nighter?”
But if I made it worth your while by offering you an overtime cheque of R10,000 to get the work done this evening, your brain would start doing the mental arithmetic.
- “What else do I have on this evening?”
- “What could I do with the extra R10,000?”
- “Is the trade-off in time worth the bucks?”
Let’s be honest. Unless you had a dinner date with your celebrity crush, the R10,000 cash incentive would probably be enough to keep you at the office burning the midnight oil.
Why do you need an incentive to build and work your personal budget?
Before we answer that question, let’s run through the benefits of budgeting:
- It helps you develop a sense of financial responsibility
- It helps you identify where your money is being spent and how expenses can be controlled
- It helps you identify problems at an early stage
- It assists with identifying priorities and ensures that they are met according to your levels of importance
Those points make a lot of sense. Your logical brain is thinking, ”I should set up a personal budget and start developing a sense of financial responsibility.”
The other part of your brain is thinking “Yeah right, that sounds like work. What’s in it for me?”
The average human has 60,000 thoughts per day. How many of those thoughts do you think are rational? How many are logical and well thought out? Not as many as we would like. Our minds are always in a state of flux, trying to work out what move to make next.
It’s fairly obvious that when we’re at the center of our thoughts (the main attraction) and focus on our needs and wants the thoughts are more likely to turn into actions.
What gets you motivated and inspired? That’s a much better question to start with.
Then make a list.
- I want to travel
- I want to go to the Champions League Final
- I want to buy a new pair of sneakers each month
- I want to retire at 55
- I want to work for myself
Let’s look at the first point.
You want to travel. In order to do that you are going to need money, right? There are only two ways to create more money:
- Make more money (not that easy if you work in a job with a fixed salary)
- Make more money available by looking at your expenses
Without even knowing it, you have already started thinking about what is required to realize your goal of travel – free up the money you will need to curb some costs.
Set a realistic goal.
I want to travel to Bali in a year from now. It is going to cost me R40,000. I have R20,000 saved already, so I need to another R20,000. How do I budget to find that extra R20,000?
If you don’t find the time to sit down and do the budget, the incentive wasn’t strong enough.
It really is that simple.
Until next time.
The Wise About Life team
