Begin with the End in Mind

Last summer I read Stephen Covey’s 7 Habits of Highly Effective People. I got the book through a book club at work and it sounded very self helpy. Once I started reading it I realized there was nothing quick about it. These habits would take a lifetime to master and by doing them your life would be better.

The second habit is “begin with the end in mind”. The book asks you to imagine your funeral and what you hope that people would say there. What kind of live would you want to life? This can feel a bit overwhelming to most people. How could I plan my whole life now? It’s not about planning your whole life. It’s about thinking of a destination to start heading in. If you want to get married and have kids, you don’t stay home not talking to anyone. Trust me, she won’t just show up on your doorstep one day.

No. You have to start meeting people. Dating. Engagement. Marriage. Honeymoon. Get pregnant. Have a baby. Married with kids is the destination. It takes thousands of literal and figurative steps to get from here to there. The big goals take time. Months and years.

This can be very discouraging. We live in an instant gratification culture. Most people don’t plan beyond breakfast. Then they wonder why they don’t have a better job or better relationships or more money or you fill in the blank. What do you wish would be different? What is your destination?

When you prepare to build a house you draw up blueprints. Even before that you imagine. You begin with the end in mind. You imagine in your head where you want to go then you draw it up.

Where do you want to go? Don’t worry about how you are going to get there. Dream today and be practical tomorrow. You got to be excited or you won’t do the hard work.

You Need a Budget

In my first post I tried to give you hope. Now it is my hope that I can give you a practical first step in doing more than just surviving.

The title says it all: You Need a Budget. It really is that simple and yet not simple at all. Money is a tough subject. Maybe you feel like you’ll never have enough. Maybe you don’t like the idea of a budget because of what it means to you. Whatever your situation, learning how to manage your money well will change the rest of your life.

In the future I will expand more on the topic of budgeting. For today, I want to keep it simple and practical.

First go to your bank or credit card website and export the last 3 months of transactions. Next categorize each transaction and group by month. You can use Microsoft Excel, Google Docs or pen and paper. Pen and paper might feel like it will take longer but being away from technology can help from getting distracted.

Now that every transaction is categorized, review your totals for each category. Your first thought will be “how did I spend that much on X?” For me it was work lunches. I used to go out for lunch every day. That 5-8 dollars adds up fast. For others it is their daily coffee.

Next question is how much did you spend in each month compared to how much you made? If you are spending less than you make, great! Budgeting can help you prioritize long term goals like retirement. If you are spending more than you make, now is the time to break that habit. Budgeting can help you realize where you need to cut back. It also helps by forcing you to decide where you are spending your money before the month begins.

The final step is to create a budget. Based on the categories you spent in the previous months, specify a dollar amount you plan to spend in each category next month. Start with things that are constant, like rent or an auto payment. Continue with more variable things like utilities. Keep going until your income minus planned expenses equals zero. This is called a zero-based budget. It doesn’t mean you should have zero dollars at the end of the month. It means each dollar in your bank account is categorized.

What happens when you run out of money before getting through all your expenses? Look at your remaining expenses and decide which are needs and which are wants. Sometimes this can be hard to judge. For example, you need clothes but you may not need more. Another type of example is quality of life things. You need food to live but you don’t need sirloin steak every night.

Now is the hardest part, you have to actually live on the budget. Imagine you are planning to build a house. You wouldn’t start by saying, just put it over there. No, you would go through a long process that produces a blueprint which is the sum of every decision you made. If your builder ignores the blueprint you would be furious! A budget is like a blueprint. If you made it this far, you have a plan. Don’t ignore the plan. Just like building a house you may have to change things as the month goes along. That is fine. Just remember that income minus expenses still has to equal zero. So if your phone bill is higher than normal, that money has to come out of another category.

There are many more things I would like to say related to the subject of money and budgeting. However, today I wanted to get as real as possible in one post. I know too many people living paycheck to paycheck. Using the above method you can start living inside your means and stop living paycheck to paycheck.

An Attitude of Possibility

When I was 20 I worked in a factory job for a year. Hard work in poor conditions in a bad part of town. It was not a fun place to work. One day I asked a coworker about the same age what he wanted to do when he grew up. His response has stayed with me all these years. You see, he lived in a part of town where living past your 18th birthday was an achievement. His goal in life was to not get shot. He didn’t believe anything beyond that was possible.

While you and I likely don’t face that type of situation, sometime we have an attitude that the only possible outcome is to try to survive. Maybe your survival is financial, living paycheck to paycheck. Maybe you are trying to survive your career. Working for a company you don’t like, doing the same unfulfilling thing everyday. Maybe your survival is family. You are young and living with your parents and siblings. Just trying to get by so you can get out on your own. Or you are out on your own living in an apartment or house you can barely afford.

When your life is all about survival there is no time for possibility. In order to break the cycle you have to be intentional about making changes. You won’t make any change if you don’t think it is possible. I know it’s possible because I’ve seen it done. I’ve done it. There are people that lived in the ghetto that made it out. There are people that started saving money and stopped living paycheck to paycheck.

“Complex shapes emerge as the flake moves through differing temperature and humidity zones in the atmosphere, such that individual snowflakes differ in detail from one another, but may be categorized in eight broad classifications and at least 80 individual variants.” Wikipedia Snowflake Article

Snowflakes are said to be unique but all snowflakes are made of water and each one eventually falls to the ground. Each of us are special but we are all made of the same stuff, heading in the same direction. You may think your situation is unique but it’s not. I believe you are uniquely positioned in a common situation. One reason support groups work is because it helps you see that other people struggle with the same stuff. You don’t feel so alone in your struggle anymore. It makes working through your issues easier somehow. We are all unique; but, we are also all heading in the same direction.

Do you believe it’s possible to break whatever cycle you’re in right now? It’s time to have an attitude of possibility. Today is the day to start thinking and dreaming about what life could be.