When we listen to the news, we hear stories about how the middle class is deteriorating, health care costs are increasing and companies are taking money from the working class to give more money for their top executives and stockholders. It paints a relatively bleak picture of how a hard working family can make it today. The question is what can be done about it. The first place where many people look is at our government and corporation to pay higher wages to workers. However, this may not be the answer.

It is my opinion that the first place that people should look is inward at how empowered they feel in regards to their money. There are always going to be money issues to argue that they should be changed, such as skyrocketing health care and gas prices or wages stagnating. The question is how will you react to it? You react to it based on how empowered you feel over a situation.

It is important to look inside first by doing a budget to be empowered instead of blaming others because:

1) This is where an immediate change can be made

Changes in federal and state laws or how companies treat their workers take time. Thus, see how you can change or adapt to the your situation because it may be years (if ever) before the world changes to how you want it.

2) People react better when a problem is worked on mutually

When I was a manager, I always responded better when someone came to me with their issue and explained how they worked to resolve it before getting me involved. As a manager, there was always a list of things that should be fixed. Thus, hearing about another problem to fix just added to this burden. The burden was eased when I heard how they were resolving the situation first without getting me involved. It made it seem like they were not just trying to dump and run rather they were coming to me to solve it together.

So, if company is just hearing complaints about workers not getting paid enough, the complaints will probably fall on death ears because it is just another complaint to the list of many. Yet, if a worker said, “I would like to get paid more by understanding how I can become more valuable to the company”, this would stand out as being different and would probably get more attention than a dump and run complaint.

Many times we complain about a situation and expect it to change. If this is not working becaues it is falling on death ears, it is time to try to change your approach by looking at your side of the issue. How can you be more productive at work? How can you limit your spending to live within your means? The answer to the second question can be found by doing the budget process.

3) If the problem appears unfixable, there is less energy to give

If a situation is hopeless, there is an energy drain. This energy drain is just going to make the problem worse financially because energy is circular; the less you give, the less you receive. Thus, if your money problems seem hopeless because the government or your company will not help you, you will give less energy at work and thus be at greater risk of getting laid-off.

Think about a problem you are having. Imagine it as hopeless for a minute and notice how energized you feel. And, then picture the situation as one that you can take action thereby controlling the outcome. Do you feel the difference in your energy level? Which situation do you feel a greater enthusiasm to tackle? Of course the one you can control. Which situation do you feel you can perform better in? Of course the one you can control. A budget is about seeing what part of your financial situation that you can control.

4) We need to see the change first, before the change actually occurs

I have been seen people chase after what they want and never seem to get it even if they had received more money in the process. Part of it is that they need to see where their money is going by doing a budget. Otherwise, their wants are just an elusive dream.

In planning a trip across country, you can start out and know where you want to go (e.g., from Boston to San Diego). Yet, if you do not plan where you are going, you may end up in San Francisco. You wouldn’t take a trip without having a road map (or a GPS system), would you? Why, take a financial journey without a budget? Without a budget, you may want to take a dream vacation, yet end up spending your extra money on a new television.

It may sound like a stupid scenario where someone would buying a television instead of their dream vacation. Yet, I have taught classes where people said that they had no place to cut back on in their spending to get what they really wanted with their money. Needless to say, in less than an hour of doing a budget with them, they usually found several hundred dollars to divert to what they truly wanted (including paying off their credit card debt). Yet, until they saw it on paper, they did not know how to achieve it.

A budget in my mind is important step in the financial planning process because it is about becoming empowered. Thus, for many who feel disempowered over their money, the budget process is the start of the shift from being disempowered to being empowered. Being empowered does not necessarily mean you have more money. Rather it is about knowing what you can control and what you can not control in any situation. You can not always control what someone pays you, yet you do have more control on where you spend your money. Preparing a budget will help demonstrate how you have more choices and thus also have more power over your finances than you realize.

So, as I continue this month on budgeting topics, I encourage you to start or revisit your budget to see where your choices are and to take power over your finances. By doing so, you will:

1) See where you can change your situation immediately instead of waiting for others which may never happen.

2) Show others (e.g., your debt collectors) that you are working on your part of the problem and thus will have a better opportunity to solve it together.

3) Have more energy to give toward reaching your goals by being empowered.

4) Outline your roadmap to financial prosperity so your are not spending money on splurges for things that you really did not want instead of on things you really wanted.

This entry was posted on Monday, February 5th, 2007 at 2:10 pm and is filed under Budgeting. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.