By Edris Tucker, AFC® Financial Coach for CommunityWorks
I’m getting better. But for most of my life, I have been Chronologically Challenged. If it takes 30 minutes in regular traffic to get somewhere, I’d somehow find a way to leave only 25, making myself consistently five minutes late.
Some of us treat money the same way as folks like me treat time.
We sometimes sabotage our efforts to live within a budget, by living right up to the edge. No margin. In today’s world, deadlines and due dates become just “guidelines” for when we have to buckle down and do the work. “Paycheck to Paycheck” no longer describes most Americans who are mostly living over the edge of one paycheck and into the other, bleeding debt into our futures, with nothing left in the “present” pocket. Then we wonder why we are stressed, financially. Wouldn’t you like to live with less money stress?
One strategy is to build R.E.S.T. into your budget.
“R” stands for Reserves. Reserves give you resiliency, the ability to rise above a negative challenge. The buoyancy in resiliency means you can float, versus sink, if you find yourself in a place where you can’t swim. An emergency fund of just $1000, if the rest of our budget is configured well, can help keep you floating and out of the mouths of predatory sharks/lenders.
“E” stands for Enough. It is up to you to set your values, decide what is important to you, lower your expectations on some things, and raise them on others. You get to decide what is Enough. It would be best to make conscious choices about where to draw the line on your spending, or you will find yourself worse than broke.
“S” stands for Sacrifice. But you don’t have to suffer to build R.E.S.T. into your budget. I mean the type of Sacrifice where you are giving up something good for something greater. What are you willing to trade, for what? What aren’t you willing to let go? This sounds a lot like Goals. Or Focus. When you have a solid Purpose, a WHY that is really, really important to you, it is easier to let go of small pleasures for greater joy.
“T” stands for Threshold. Decide on this first, then re-engineer your budget backward. Think “Then Some.” Margin. A fudge factor. For example, most entrepreneurs are surprised when they apply for C.W. business loans that we expect the owner’s budget to allow for their household expenses, their current obligations, the new loan payment, AND a margin of cashflow that is 15% greater. Most banks look for 20-25%. This Threshold means no matter whether the business succeeds or not, the business owner can make the payments.
If you have Enough And Then Some in your budget, then your family still EATS, regardless of the marketplace.
Clear expectations, set in accordance with your values and the reality of the actual size of your take-home pay, create peace with your money. If you build your budget with reserves and have decided what is enough and what to sacrifice so that you can have some “Then Some” threshold in your budget, do you think you would have less stress?
If so, commit today to build R.E.S.T. into your budget.
And if you need some help with the numbers and you are a prospective homebuyer or entrepreneur, I’d be happy to work with you in Financial Wellness Assessment and Coaching sessions. Click the link below for more financial wellness information.
Edris Tucker, Financial Coaching Program Manager