The Winning Strategy for Household Budgeting! Stop Doing That Thing
I am Nanami Sato, a financial coach
and an expert on money who expands the possibilities of your life.
I often hear people say that managing a household budget is difficult or a hassle.
If you found yourself nodding along, you might be taking it a bit too seriously. Household budgeting is roughly
Money coming in (= income)
Money going out (= expenses)
Money left over (= assets)
a three-part structure.
By first grasping this fact, the winning strategy for household budgeting becomes clear.
Now, jumping right in from the start,
The winning strategy for household budgeting that absolutely succeeds! ...Do you want to know it?
It is...
It is...
Living within the range of the money that comes in!
If you can do this, you will never be in the red.
See! Isn't that amazing?
Wait a minute?
Are you angry, saying, "Isn't that obvious!"?
Are you disappointed, saying, "Is that all it is?"
I'm sorry for beating around the bush.
Even so, as a money professional who has been by the side of over 1,200 households with their financial worries for 24 years, I am saying this in all seriousness. Thisobvious thingis extremely important.
I'll say it again because it's important.
The ultimate winning strategy for household budgeting that never loses is...
Living within the range of your income.
Think about it. If you could always live within your income at any given time, wouldn't there be no need to save money in the first place?
If that were the case, the time to dip into your savings would never come.
Yes. Of course! I understand.
The premise here ofat any given time
is an impossible game for most people. Because, you see
・When you can't work due to illness or injury
・When you go on maternity or childcare leave
・When you work shorter hours
・When you become unemployed
・When educational expenses become enormous
・When you buy a house
・When you buy a car
・When you enter retirement
・・・etc.
Income decreasing or expenses increasing due to various circumstances—these are moments that will visit everyone at some point in life. That is precisely why preparations like saving money and having insurance are so important.
Yes. Did I convey that the necessity of savings and insurance is actually based on household balance, and that the premise for this is "living within your means"?
Now, having put into words something that is almost too obvious, let's dig a step deeper into how to improve your household finances.
The ways to improve your household finances are
① Increase income
② Reduce expenses
③ Invest assets
one of these.
All of them are important in their own way, but under the keyword of household finances, isn't
② reducing expenses (= saving)
the point that gets the most attention?
So, if you were to start saving from now on, where would you begin?
Based on my gut feeling from numerous interviews so far, many people were quick to list "reducing food costs" first.
And if you think so too, there is a 98% chance of failure!! (Oh, well, the number is just a guess, but you get the idea that it's a very high probability).
I won't tell you anything bad. Don't do it.
The reason is that saving on food costs...
・Always forces you to endure and builds up stress
・Is ineffective despite being painful
・Becomes ridiculous and you won't be able to continue
・If anything, you might waste money as a reaction
Of course, this is also about balance, so I won't say "never do it." For example, it might be a necessary theme for households that have a lot of food waste.
Even so, I want to convey first and foremost that
it is not something you should tackle first before anything else
.
If you're going to put in the effort, let's work on things that are much easier and yield better results.
So, where and how should you start?
This has become long, so the rest will be in the next installment.