Step One: The Dreaded Budget

No one, and I mean NO ONE, becomes successful without written goals. Will not happen. I had the idea for this web site in my head for months. I kept telling myself that the concept just didn't feel right yet. Then one day, I sat down and told myself this is crazy. So I put on paper a plan for the website. It wasn't perfect, but it was on paper. Several more weeks passed, but I hadn't written one word of copy. So I sat down again, made a list of the courses I needed to write before the site could go live, and this time I assigned a projected completion time for each. Only then did I have the components needed to navigate the track to finish the race.

All goals are that way. Unless you put them on paper and set them within time frames, you will never achieve them. That is not to say I haven't had to adjust the steps along the way. I ended up writing courses in a different order and some took longer than projected, but the finish time and when I wanted to achieve it was always there to keep me moving ahead.

There have been a lot books written on the subject of setting goals and designing a blueprint for your life. Since this course focuses on the concepts of money management, I won't take the time to here to give you a point by point description of how to set the full range of goals for your business and personal life. That will be addressed in an upper level course. However, before you go on, I thought I would mention some great quotes on the subject that I have read:

  • Zig Ziglar says, "If you aim at nothing, you will hit it every time"
  • P. T. Barnum noted, "Money is an excellent slave and a horrible master", and
  • Jesus said, "Which of you, intending to build a tower, does not sit down first and count the cost, whether he has enough to finish it?" (Luke 14:28)

Your written monthly budget is your money goal. You must set up a budget each month. I don't mean the type that you list all of your bills and decide which or how you are going to pay them this month. I am talking about the kind of budget where you start with each dollar of your income and decide how it is going to be spent. 

It is called a zero-based budget. Before the start of the month, write down on paper where each dollar you earn is going to be spent. That includes all of the variables like food, gas, eating out, auto maintenance, clothing, and haircuts. Every single dollar of expense is assigned to a dollar of income. Nothing is assigned to a credit card. 

If you have a variable income like people who work on commission or bonuses, you simply have to prioritize your expenses. If you run out of income before you get to the bottom of the expense list, then those last items will have to be crossed off and wait for another month.

And if you are married, you must agree on the budget with your spouse. It is impossible to win if you aren't working together. Once you agree on the written budget, the paper is the boss of your money. To change the budget during the month, both spouses have to agree to the change and it still has to balance. If you add an item to the budget, you must remove an equal amount.

One final note on your budget. You can't even start this process until you are current with all of your creditors. As hard as it may be, you have to spend only on the bare necessities until all of your bills are caught up. You must do the hard things now, so that you live your dreams later. If you can't tell your friends, 'No, going out this weekend is not in my budget' - you have lost already.