{"id":4289,"date":"2020-02-10T13:20:36","date_gmt":"2020-02-10T13:20:36","guid":{"rendered":"https:\/\/clients.firstfinancialsecurity.com\/FFSBB\/?p=4289"},"modified":"2022-02-24T16:07:34","modified_gmt":"2022-02-24T16:07:34","slug":"you-have-to-know-your-numbers-to-change-your-numbers","status":"publish","type":"post","link":"https:\/\/clients.firstfinancialsecurity.com\/FFSBB\/2020\/02\/10\/you-have-to-know-your-numbers-to-change-your-numbers\/","title":{"rendered":"You Have to Know Your Numbers to Change Your Numbers"},"content":{"rendered":"

The easiest way to put your financial life in order is to start budgeting, yet most people are still resistant to it. In fact, only 4 in 10 American adults would be able to cover a $1,000 emergency using their savings. Not only is financial security good in and of itself but getting your finances under control can also lead to better sleep at night, sturdier romances, and greater overall happiness.<\/p>\n

Where should you start? We\u2019ll show you, but first, there are two truths that you must address to get in the right mindset for financial health. First is understanding that, when it comes to your money, you are the one in the driver\u2019s seat. The bad news is that no one is coming to save you\u2014this is all on you. The good news? Budgeting is not that hard, as long as you dedicate yourself and commit to change.<\/p>\n

The second truth is the importance of delaying gratification. Humans were designed to move toward pleasure and away from pain, even if it costs us more pain down the line. This instinct toward pleasure is called instant gratification\u2014evidence of its existence can be found in the Stanford Marshmallow Experiment of 1972. In the study by Dr. Walter Mischel, a group of children were each given one marshmallow on a plate and told that it was theirs to eat. Then they were told that if they waited a certain amount of time before eating it, they could have another marshmallow as well and get to eat them both.<\/p>\n

\"\"<\/a>Plenty of children ate the first marshmallow instead of waiting for the other. In follow-up studies, children who waited for the second marshmallow were found to lead better lives overall\u2014they had better SAT scores, lower amounts of substance abuse, better responses to stress, more educational achievements, and more success in relationships. These children were practicing delayed gratification, and their lives were better for it.<\/p>\n

Luckily, your willpower can be strengthened like a muscle. It is never set in stone. \u201cThe ability to delay gratification for the sake of future consequences is an acquirable cognitive skill,\u201d according to Dr. Mischel. We budget to reverse our human conditioning\u2014getting the pain out of the way early and enhancing our reward later in life.<\/p>\n

Identifying Your Needs and Wants<\/h3>\n

To budget properly, you must first learn the difference between the things you want and the things you need. Wants are the things that give you pleasure, such as a beach home, the latest fashions or a nicer car, while needs are all the things you have to buy to survive, including food, shelter, basic clothing and transportation.<\/p>\n

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Before making any purchase, determine whether you\u2019re satisfying a want or a need and whether it will bring you closer to your financial goals or farther away. Cover your needs first, and then, with the money you have left, you can move toward your wants. Don\u2019t be fooled, though! Think carefully\u2014sometimes something that looks like a need can actually be a want in disguise.<\/p>\n

How to Start Budgeting with an Irregular Income<\/h3>\n
1. Track Your Expenses<\/strong><\/h5>\n

This helps create financial awareness\u2014if you don\u2019t know where your money is going, how will you know which habits to change? To make your money work for you, you have to make sure you aren\u2019t wasting it. For the next two weeks, keep track of every dollar that you spend, and write it down using our downloadable Expense Tracker.<\/a><\/span><\/p>\n

2. Know Your Baseline<\/strong><\/h5>\n

The following expenses make up your baseline:<\/p>\n