If you want to build wealth and set yourself up for a life of financial success, there are a few budgeting skills you need to master.
And while that may not sound quite as flashy as selling a business for millions of dollars or inheriting a boatload of cash, it’s a path to financial freedom that anyone can take.
In fact, for the rest of this guide, I’m going to cover 7 of the most important budgeting skills you need to master if you want to be financially successful.
Let’s dive in!
Consistency is, hands down, the most important budgeting skill you can have.
Whether it means creating a budget on the first of every month, sitting down with your spouse to discuss your weekly budgeting progress, or logging your expenses at the end of each day, consistency over time leads to success.
Just like you can’t go to the gym one single time and expect to get in shape, you can’t just create a budget one day and suddenly become a master of your finances.
Building wealth isn’t a quick fix; it takes discipline and persistence over a long period of time.
While that may not sound very exciting, it’s how the vast majority of wealthy people achieved their financial success.
So, the next time you think about skipping your monthly budgeting routine, remind yourself that being consistent with small efforts over time is the key to reaching your big financial goals.
Honestly, it’s usually the little (sometimes boring) tasks that end up making the largest difference in the long run.
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2. Saving/Investing Before You Spend
Another important budgeting skill is getting into the habit of moving money into a savings or investment account before you spend a dime on anything else.
Seriously, I’m talking groceries, rent, mortgage, utility bills, or anything else—save before any of those.
If you don’t, your monthly expenses will almost certainly eat up your entire paycheck, leaving you with little to nothing left for savings.
All that said, if you have trouble sticking to this save-first model, we suggest setting up an automatic transfer from your bank account into your savings or investment accounts.
You can schedule these transfers at the beginning of each month or whenever you receive your paychecks. In fact, if you receive your paycheck through direct deposit, you could have a portion of it deposited directly into savings.
That way, you won’t even have the opportunity to spend until after you’ve saved.
Because having a healthy savings account is vital to your financial health, this is one of the first (and most important) budgeting skills you should adopt.
3. Tracking Your Progress
As anyone who’s tried to stick to a budget will tell you, tracking your progress throughout the month is the best way to ensure your success.
In fact, the more diligently you track your progress, the more likely you’ll be to stay within your budget, and the better your chances will be of reaching your financial goals.
For this reason, we recommend logging your expenses into your budget daily to make sure you spot any problems as soon as possible.
This will give you time to adjust for any excessive spending, reallocate money for surprise expenses, and keep your spending within your means.
If you struggle to make time to track your daily expenditures, try making your tracking method as easily accessible as possible.
For example, if you use a spreadsheet to keep track of your budget, download a copy on your smartphone so you always have it with you when you’re on the go.
Or, download a budgeting app like the EveryDollar app from Ramsey Solutions.
Apps like these make it easy for you to quickly log your expenses from anywhere.
4. Self-Awareness And Honesty
To become a successful budgeter, you need to be honest with yourself about the areas of your life in which you tend to overspend. Then, develop a plan ahead of time to prevent yourself from falling prey to these temptations.
For instance, if you have a tendency to overspend when online shopping, you could use an internet blocker to prevent yourself from logging onto your favorite online clothing stores.
Or, if you like to swing through Starbucks every day for a $5 latte, you could brew your own coffee at home, and take a different (Starbucks-free) route to work.
Sticking to your budget is about knowing yourself and anticipating the times when you’ll be tempted to “cheat” on your financial plan.
5. Thinking Long-Term
100% of the financial decisions you make (good or bad) will impact your long-term financial future (positively or negatively).
Therefore, one of the top budgeting skills you can adopt is viewing your actions through a long-term financial lens.
And this is an especially important skill when it comes to recurring expenses since they can add up extremely quickly.
For example, master budgeters will have a difficult time justifying the cost of a $5 daily cup of coffee.
Because they understand that if they invest that same $5 every day for the next 40 years earning 10% interest, that daily cup of coffee would grow to over $800K!
Of course, I’m not suggesting you stop enjoying your present life altogether.
I’m just saying that when you start to assess the long-term impact of your actions, it becomes much easier to make wise, beneficial financial choices.
Arguably the most important budgeting skill you can have is patience.
The more patience you have when investing long-term or saving up cash for major purchases, the more wealth you will be able to build.
On the flip side, investments that promise you quick and easy financial success rarely pan out.
And even if they do, they’re rarely sustainable and end up falling flat pretty quickly.
Unfortunately, we live in a fast-paced world that values speed and efficiency over almost anything else.
For this reason, it’s easy to become frustrated when you’ve been persistent with your budgeting, saving, and investing efforts but you haven’t yet started to see substantial results.
But before you spiral into a state of discouragement and doubt about your financial efforts, we encourage you to stay the course.
Remember that success is the result of patience and persistence.
Even if you don’t yet see the light at the end of the tunnel, trust that your future self will be grateful that you were patient enough to keep going.
7. Saying ‘No’ To Yourself And Others
As you press on toward your financial goals, there will always be temptations waiting to pull you off-track. And at times, it can be quite difficult to turn them down!
But here’s the thing, from drinks with co-workers to online shopping, the better you get at saying “no,” the more wealth you will build.
Think of it this way, every time you say “yes” to something, you are, by default, saying “no” to something else.
For instance, if you say “yes” to buying an expensive pair of shoes, you are, by default, saying “no” to investing that money for your future.
It’s a zero-sum game.
But that’s why budgeting is so important.
Since a budget provides you with clearly-defined financial boundaries, you shouldn’t have any trouble determining when you can responsibly say “yes,” and when you need to say “no.”
So, there you have it – seven budgeting skills that, when used properly, can make you rich!
While they might not be very glamorous, they’re the tested methods countless people have used to accumulate wealth.
Pair these skills with the right mindset and some discipline, and you’ll be well on your way to building the financial life of your dreams!