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Be More Self Sufficient With These 3 Simple Budget Strategies

Be More Self Sufficient With These 3 Simple Budget Strategies

By on May 27, 2013

When it comes to finance, most people have a hard time getting it straight.  So here is how to be more self sufficient with these 3 simple budget strategies. In aiming for a self sufficient lifestyle, managing the dollars and cents is vital.

1. Keep Accurate Accounting

In budgeting for yourself, you always need to know where your money is and where it goes.  A titan of industry, John D. Rockefeller, always kept a little book with him and wrote down every penny he spent and earned in this little book. He kept a daily account.  This is a brilliant habit to emulate. And remember, his great grandchildren are still spending the money he earned today. Similarly, Bill Gates at Microsoft was known as a stickler for strict accounting measures.  These two very rich men did what most people don’t: they accounted for every penny spent and earned.

To live your day to day life on the dollars you earn, you too need to account for what you earn and spend. Do what J D Rockefeller did, write down every transaction! This record will allow you to see where your money is going and show you the everyday truth about how much you earn and spend.

Many people take a broad view of their earnings and expenses – for example they say “I make $40,000 per year, so I can spend (which includes paying off your debts!) $35,000 and be saving money!” This view doesn’t work as these same people do not know how much they spend.  When you keep an accurate account of how much money you have, how much money you are making, and how much money you are spending, you can project how much money you actually have into the future and you can also accurately predict how much you will spend and save.

By keeping accurate daily records, you will notice that you are spending too much on coffee (for example) every morning at the corner market, and realize you can cut $40 out of your monthly budget spend by making coffee at home. So your first step is to keep an accurate daily record of your finances!

2. Save For a Rainy Day

This is hard!  Most people think they need to spend 100% of their earnings to just get by; you will see this is a misnomer, especially when you keep a daily record of your ins and outs.  You should have enough savings or investments to weather any financial storm of at least 6 months. Saving for a rainy day must be part of your plan.  When you look at your budget (after practicing good accounting and keeping a daily record), you should always have enough to quit your job and live off your earnings for 6 months.  This will come to fruition by cutting your spending in those places that you identify as extra to your needs. Holding a “cushion budget” will also help for a less stressful financial life.

3. Spend on Your Needs Before Your Wants

There is a big difference between something you want and something you need.  To live, you need air, water, food, and shelter. In a self sufficient life, we want to be able to support ourselves in these needs (as much as possible) on our own and in our community. Everything else in life is a “want”.  Think long and hard before you spend a single penny – make sure you ask yourself “Do I need this? Or do I want this?

If you simply want it, think about investing or saving your money instead. Remember, you can invest in yourself to supplement your income – take a look at our 8 Ideas To Make Some Extra Income As Part Of Your Self Sufficient Lifestyle for some inspiration. Soon you will find that your savings and investments are paying for the things you want without putting you under unwanted financial stress.  As Warren Buffet, the famed investor said about spending: “If you buy things you do not need, soon you will have to sell the things you need.”

Warren Buffet also famously stated: you should not save what is left after spending, but spend what is left after saving.  When budgeting, be brutally honest with yourself, write it all down and make sure to make your finances a priority.

Read more about finances and business planning from Nicholas Coriano at nicholascoriano.com

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