Last updated on December 26th, 2023 at 01:23 am
At the time of this writing, my YNAB account shows my Age of Money is 106 days. That means I’m spending the dollars I made over 3 months ago. How did I get to this point? What were the steps I took? In this post, we’re going to look at some of the things you need to take into consideration if you want to get on the right track for financial success. Too many young men blow money on ridiculous pastimes and purchases. True wisdom comes in learning to enjoy the simpler things in life and learning to master the practice of delayed gratification. If you can realize this and implement it sooner rather than later, you will be on track for a successful and financially free life.
A lot of people hate the word budget. Especially young people. The budget was the thing that your grandparents had to do when they were young so that they could make ends meet after working on the farm all day. A budget was the reason you couldn’t get that toy as a child or that car as a teenager. Indeed, many people have the idea that a budget is restrictive above all else. I’m going to argue the opposite. Committing to a budget was one of the most financially freeing things that I did, and I’m so glad I did it early on.
Think I’m kidding? I just bought a $2,600 2021 Martin HD-28 guitar last week without breaking a sweat. It would’ve been $3,500, but I found a used one in mint condition out of New York 😁. This guitar is widely regarded as the premiere dreadnought acoustic guitar. Handcrafted from solid Sitka and East Indian Rosewood. I had to have one shipped to me because they are very rarely in stock at stores. I’ve wanted one since I was 12. Now, this particular bit might not apply to those of you who are currently supporting families, but for all of my single 20-something young professionals… if you were to look in your checking account right now, could you drop $2,600 with no problem? Considering 60% of U.S. adults, including those making high income, live paycheck to paycheck, I’d wager some of you cannot.
What’s the secret? Am I filthy rich? Did I inherit a fortune? No, and no. I budgeted. 8 months. Every week, I saved a portion of my paycheck and earmarked it for this guitar. I cut out the things I didn’t care about to work towards the things I did. That’s the secret that many simply don’t have to self-control to learn.
I’ll be honest with you, I ate baloney sandwiches for lunch for 8 months. Boom. Just like that, I lost some of you. For many, that is the cardinal sin of budgeting. They don’t want to have to sacrifice an accepted lifestyle to achieve their goal. They don’t want to buy the generic brand, or skimp on the Friday night festivities. Read the bolded sentence above one more time. You. Don’t. Have. To. If a $5 coffee if something you want every morning and you can afford it, go for it. For example, my mother adamantly refuses to buy any other ketchup brand besides Heinz. One of the tenants she lives by is “no off-brand Heinz or Jell-O”. She almost threw a fit the one time I went shopping and grabbed a bottle of Great Value. If Heinz ketchup is the only acceptable ketchup for you, buy it. It’s all about being within reason.
Back to my baloney example. I calculated that buying lunch would cost me around $10 a day where I work. That’s $50 a week, also known as $200 a month. For the 8 months I saved, I would have lost out on $1,600 towards my Martin HD-28 guitar! I know myself well enough to know I’ve never been a lunch person. Sometimes I skip simply because I’m not hungry, or I’m in the middle of a train of thought at work and don’t want to take a break. Therefore, it’s no big deal for me personally to wolf down a 50-cent baloney sandwich I made at the house.
Now, note that I was the only one out of all my coworkers who ate a baloney sandwich. They’d go to the cafeteria and get fried chicken, mac ‘n cheese, taco salads, and a whole host of other delicacies that the kitchen staff dreamed up. It smelled good, it looked good, and I caught good-natured flack more than once about my “broke college kid” baloney sandwich. Some people would have cracked under the peer pressure. They would have thrown away the $200 just to look like everyone else. Don’t be that guy. Stick to your plan. If you have a goal in mind, whether it be a guitar, a game console, a down payment on a car or a house, a boat, etc., work towards it.
FIND YOUR BALONEY SANDWICH. Find the thing you don’t care about as much, put it on the back burner, and divert those resources towards building your goal.
Building that budget, and watching the numbers grow every paycheck towards that goal, more than makes up for the flack you’ll catch from people who aren’t practicing the same level of financial self-discipline. At the end of the day, if your responsibilities are taken care of (like tithing, living expenses, and providing for dependents) then your money is your money. There’s nothing wrong with people who don’t budget. Don’t look down on those who don’t want to chart out their financial goals, but don’t let their lack of direction distract you from pursuing yours.
When the pressure is getting to you, keep in mind the following 3 things regarding budgeting. Think long-term, and keep your eyes on the prize.
Budgeting reduces stress.
When budgeting is done well, you will always know where you stand with your long-term financial goals. This frees you to be more “in-the-moment” regarding your finances. Now, it’s important to see that there are men who will be “in-the-moment” and spend money they don’t have, but that is the polar opposite of what I’m talking about here.
I’m in-the-moment with my finances because I’ve built up a buffer that allows me to be. If I have a bill that comes up unexpectedly, I just pay it. If I see a deal on Amazon that I want to take advantage of, I can without any fear of overcharging. If someone needs some help, I can give it without hesitation. There is no stress associated with my credit card statement or bank statement because I already know what money has come out and what money has come in.
I already plugged it a bit earlier, but YNAB is the tool that I use to keep track of all of this. I have this software linked to all of my cards and accounts, and I always can see at a glance where my money is at. This brings a peace of mind that is important to have if you are to excel in your financial journey and reach the next level.
Budgeting can also improve your ability to manage time. In all actuality, time is more important than money. Don’t believe me, just ask any billionaire sitting in a hospital room waiting on his last breath. The reality is that money is a tool that we can use to prosper in this life, but time is what makes each day of this life real.
I waxed slightly philosophical to bring this point home: budgeting allows you to say no to unnecessary activities and plans. It forces you to be selective with your bank account and with your time. If you’re on a budget, you’re not going to be blowing money every Friday night. This is healthy for your finances, and probably also for your physical well-being, as most young people tend to act wilder towards the end of the work week.
This means less stress of trying to “keep up with the Joneses”. You don’t have to go buy the latest boat or truck, You don’t have to make an appearance at the latest party or get-together. When you become confident enough with your financial goals that you are willing to turn down those kinds of “experiences”, it shows that you are becoming more comfortable in your own skin and goals. By no means am I saying to be a penny-pinching hermit, but realize that the moderation brought on by sticking to a budget can have a positive impact on your mental health.
Budgeting provides financial freedom.
As I alluded to earlier, there is freedom associated with budgeting. Many people do what they want, but they also suffer the guilt that comes with doing what they want. Case in point, Mike wants a new muffler exhaust kit for his Mustang, but rent is due for his apartment next week. Mike makes the mistake of watching a marketing promo from the kit manufacturer and ends up buying the kit on a whim. He then feels guilty because he can barely make rent and has to forgo his savings goal for the month.
Mike did what he wanted and he got the kit, but as soon as the “new” wore off, he felt guilty because he realized he wasn’t going to make his savings goal and he barely made his rent. This is the trap a lot of people fall into. They get their mind set on a thing, whether it be a vacation, a toy, or some other object. They go and buy it, but then they experience buyer’s remorse. That’s the unspoken truth about much of the consumerism in America today.
Having a budget removes buyer’s remorse. Why? Because I already had the funds allocated for the item. Every purchase I make is already premeditated and calculated. Now, I don’t have an Excel spreadsheet that has every item I’ll ever buy listed in it, but I do have a catch-all fund for it. Every month, I allocate myself $300 to blow on whatever I want. I’ve used it to buy a floor heater, clothes, a clothes iron, shoes, and all kinds of random things. All of my “impulse” purchases come from this fund, so I never feel guilty about pulling from it. Now, if I were Mike, I would have created a target goal in YNAB and saved up for a few months before buying my exhaust kit, but that’s just me.
If you implement this, you will find that over time you begin to self-regulate. I rarely use all $300 every month, and whatever I don’t use rolls over into the next month, How do I regulate it? I ask myself, “What’s the benefit?”. If my old tennis shoes have worn-down soles, then the benefit of buying new ones is better support for my feet. If I’m tired of the temperature in my bathroom feeling like 32 degrees when I get out of bed in the morning, I buy a floor heater. These are purchases with purpose. If you can master this mindset, you will free up a lot of money while also increasing the quality of your daily life.
Budgeting builds character.
This brings us to our final point about budgeting for today. It builds character. You have to have self-control when you budget. You’re too old to be a kid in a candy store. There comes a point in a man’s life when he has to have the common sense to make good financial decisions. We are not supposed to be penny pinchers or misers, but we are to set ourselves up to provide for ourselves and those who depend on us. If you don’t have the self-respect to delay self-gratification and put the work in to build a better financial future for tomorrow, then you are in need of some character building. Start small with a budget and build your way up. The easiest is the 50-20-30 rule.
- Bills (50%)
- Savings (20%)
- Wants (30%)
Of course, you can decide to be flexible with this. If you’re in debt, or money is tight, you may want to trim back the wants category in favor of more towards bills, or you may want to use your savings to knock out some school debt, or credit card debt, or something similar. I actually have modified this method slightly for myself to find a better sweet spot. You can see that here.
Also, part of what builds that character is having the patience and endurance to see the budget through. Most likely, you will not have it nailed down until about month three or four. There are kinks to iron out and tweaks to be made to have a budget that fits your lifestyle. I built a free tool for all Man of Might subscribers to use to help visualize how to allocate your money. It was a great help for me when I was getting started, but, if you want to go old-school with a spreadsheet, that’s fine as well.
Get access to the budget calculator here!
Above all else, learn to be content. A big part of having a budget is learning to care more about your financial goals than other people’s opinions. Few things in life will foster more discontentment than a man who compares himself to another man. Moreso than our female counterparts, we have a sense of pride that often rears its head in ugly ways. Sometimes, it leads us to make rash financial choices so that we can be part of the “in” crowd, or that so we can be “better” than so-and-so. A little free tip… if you went into debt buying a new truck, just so you could one-up the guy parked next to you at Walmart, you’re in this category. Budgeting gives us more opportunities to be content with what we already have. The sooner we recognize and embrace that, the better our financial futures will be.
