This is the second step in fattening your wallet (to view the 7 steps kindly click here)
The word budget, sometimes causes allergic reactions. If your friends or co-workers are going on a lunch out and they ask you if you want to join and decline and say you are on a budget they cringe. The same scenario was also said in the book The Richest Man in Babylon
To recap the story, Arkad gave the second cure in the second day and one student reacted that he should not be barred from enjoying his hard-earned money by imposing budget and besides that a free man should be free to do whatever he likes of his hard-earned money. This is true. Nobody can dictate to us what we shouldn’t do with our possessions. And so Arkad explains and at the end of the day it was all made clear why budgeting is important.
The problem is most have a very negative definition of budget. I remember in my job at a retail company that the supervisor told the staff not to report the actual savings made in the supplies but rather just follow what was reported before. He argued that if the management sees that the staff can work with a smaller amount, they might lower the budget thus depriving the department of available funds.
Budgeting should be defined as the optimum distribution of available resources to operate at the best level. Budget is a plan that should lead to achieving a goal.
In the lesson mentioned, Arkad told the students to budget the remaining 90% to needs, wants, and worthwhile desires. Many people think that budget should only be made for needs but in reality in should include wants and worthwhile desires depending on the priorities. Of course needs would get the biggest part of the budget. You need to survive in order to generate more income. Needs are the necessary things so that you would be able to function accordingly.
Wants on the other hand, are things that are not necessarily important and you can live without. It is maybe strange that you need to budget for your wants, but again this serves a purpose. Common to human is that if cravings are not met it will turn bad and in the end ruin everything. A good example is people undergoing diet. Though from time to time they should get a small piece of cake as a treat for a job well done dieting. If that small piece is not met over an extended period of time the craving won’t get tamed and sooner or later it will explode and you end up eating a whole cake when you felt like it.
The small and not so often meeting your wants actually helps in taming your wants. It cuts your craving from growing wild. It leaves a small space so that your cup will have space to endure another time. SO make it a part of your budget. A once a month movie or a once a year travel won’t hurt as long as you budget for it.
And lastly, you got to set budget as well for worthwhile desires.
Worthwhile desires are meaningful and life changing things that in the long run would benefit. A good example is enrolling yourself in a cooking class. Budgeting for it might be eating some of your income for a better use to your needs but the knowledge you get from cooking class might help you in better preparing good meals and thus making you avoid restaurant dining and spend less by cooking it yourself.
Attending seminars may at times look impractical, especially if the price is a bit high, but finding a good seminar is worthwhile. Learning leadership skills, writing skills, speaking skills, and probably investing skills will in the long run benefit you and would be of great use when you get promoted in your work or even better enable you to manage your own business well.