The number one goal in budgeting is that you spend less than you make. This applies for personal finances. It is not just for businesses. You as a person or a family are an economic unit that needs to operate like a business. To be financially sustainable as an economic entity you must manage your spending so that you spend less than your income every day, every week, every month and every year. This is the key premise to successful budgeting. It is an attitude. You need to learn this attitude. It is the old adage…You need to have someone teach you how to fish not have someone give you some fish. The key to the key is to action the attitude of spending less than you make.

You need to look at the fundamentals of your budget. There is the income side and there is the spending side. On the income side you may have a nice steady job where you get paid bi-weekly. Other folks have jobs or businesses that pay in cycles or are seasonal. There are budgets so that you can get a snapshot of your income. This way you know when your income comes in. The idea of a budget is that when you know when your income is coming in you can plan how to spend it so that you spend less than you make. If you are on a bi-weekly schedule it is routine. If you are on a seasonal income where you make most of your income in 3 or 6 months of the year, you need to plan your spending so that you save money when you have. You save the appropriate amount to spend when the income is low in the off season.

They fact is that you know what your income is. The key is that you have the capacity to spend less than that income. If you make more income you can spend more. If you have a bad month or season, you must reduce your spending so that it is still less than you made during the working season. In sports the cliché is that to win you need to focus on what you can control and that is your own game. In budgeting, your own game is the spending side of your budget. The key is to adjust spending in any circumstance so that you win the budget game by spending less than you make.

If you have a big increase in income you can still spend more than you make by irresponsible spending. At that point you are no better off than you were when you made less. From the other perspective, if you are a blue collar worker who spends less than he makes and saves some money, you are further ahead than the pro athlete who is bankrupt 2 years after his playing career is over.
When you go to shareholders meeting and investment conferences, the first timers are always surprised that most of the owners of companies do not look rich. They have nice clothes but not glamorous clothes. They are rich because they spent less than they made and invested their savings in things that give them even more income and wealth.

The overwhelming majority of people of wealth do not achieve that wealth until later in life. They control their spending and compound their returns over decades to achieve the net worth and income that statistically defines them as wealthy. They have watched those who have made millions and have spent even more millions come and go. They know the key to personal financial success is simply to spend less than you make.

Personal Financial Coaching is required to address the epidemic of irrational behaviors in financial decision making. This occurs at what can be described as the individual, the personal or micro level. This also occurs at the corporate, the government and the international or macro level. Personal financial coaching implies that there are actions to be taken to prevent injuries and promote financial health such as saving. The goal is to train retail users to manage their money sanely and rationally without bias and to teach vendors how to communicate how to use their products to manage money sanely and rationally. The result of Personal Financial Therapy is Financial Literacy.