A few years ago, I decided that it was an appropriate time to put my money where my mouth was and to start my own personal budget.
The idea did not fill me with joy nor optimism; a feeling shared by most of my clients when I first suggest the idea. Like most people, I feared a life of restriction and lacking spontaneity.
However, a few years on and the result has been quite the opposite. Prior to budgeting, I was effectively flying blind, making spending decisions based on a feeling that I was going to be fine. I was always saving money and felt like I had a decent grip on my finances, and yet I was bouncing from month-to-month without ever really knowing where my money was being spent nor where it was going in the future.
I had a rough idea of what my monthly direct-debits were and I had a rough idea of my weekly discretionary spending, and yet I really had no idea what I’d be left with at the end of the month.
Having a budget planner has brought me clarity
Having a budget planner has brought me clarity and, rather than making things more restrictive, it has actually given me far more freedom. I now immediately understand the long-term impacts of a large capital expenditure such as a holiday. I know exactly how much I’m going to have left at the end of each month and can plan accordingly with the money.
And, just to clarify, at no point have I ever set some kind of weekly ‘spending limit’. Simply having visibility and clarity over my spending has encouraged far greater habits – and that’s what a real budget is.
The net result is that I am now saving far more money than ever before, without making any adjustment to my lifestyle. More importantly, I feel in full control and confident with each decision I make. Long-term planning has become easier as I can now consider the impact of making an additional pension contribution or overpaying on my mortgage.
But how can I possibly be saving more without making any adjustment to my lifestyle?
Well, I think that sitting down and checking my bank statements regularly has prevented a lot of leakage. As a result, I’ve cancelled any unused subscriptions and shopped around for cheaper deals. Visibility and clarity over my budgets has made me more conscious of silly spending – the odd fiver here and tenner there that I had no need to spend.
A common misconception with a budget planner is that they’re most effective for people with less money. In fact, working in this job has taught me that they actually have a more transformational impact on people earning large sums of money. Those people typically have less time or inclination to manage a budget and yet have far more expensive lifestyles. Moreover, the impact of each wasted pound is far less severe on somebody earning more rather than less – you may have heard of the ‘law of diminishing marginal utility of income’.
Unfortunately, this often means that many high earners have very little control over what they’re spending because they know plenty more is coming in next month. This favours financial leakage and also makes it very difficult to plan for the future.
For anybody who can relate to these feelings, I strongly recommend you reach out to us and let us help you develop a budget that works for you.
I promise you it will bring you clarity and control to your finances.
