Law Career Fitness Challenge #11-Budget Your Time and Money

You wouldn’t think of taking an important trip without something – a map or an app – to guide you safely to your destination.

Similarly, you can’t make important time and money decisions without a budget.

Today’s challenge is to budget your time and money. You might already be skilled at this. If so, consider this a refresher course. If not, you’ll be surprised at how easy it is.

In its simplest form, a budget is nothing more than a summary of (a) what you’ve got, and (b) what you want to do with it. Regarding time, we all have the same amount: 24 hours a day, 60 minutes an hour. The question is: how do we choose to spend it?

Money is trickier. We all have different amounts, which can change from day to day. But the ultimate question is the same: how do we choose to spend it?

Time Management

You can delude yourself into thinking you’re managing your time by buying an app or calendar to do it for you. There are many to choose from. But that’s not a real solution. The product won’t work if you don’t use it, or if you use it intermittently or incorrectly.

The real solution is to change your thinking. Realize that there are only a few ways to spend your time: thoughts, conversations, actions. Maybe sleeping, if you don’t consider that an activity.

Then take an honest inventory of how you’re presently filling your days. These experts recommend carrying a notebook to log all your thoughts, conversations and activities for a week: “This will help you understand how much you can get done during the course of a day and where your precious moments are going. You’ll see how much time is actually spent producing results and how much time is wasted on unproductive thoughts, conversations and actions.”

All that’s left to do is prepare a daily and monthly schedule – and then stick to it. See? No big trick.

Five Training Tips for Budgeting Your Time

Schedule appointments with yourself. Block out time alone to pay bills, work out or study. Mark it on your calendar. Make these self-appointments as sacred as any other.
Take charge of your day. It is empowering to arrange your thoughts, conversations and activities in a manner that suits you, not someone else.
Plan on interruptions. Even the best-laid plans will be disrupted by unforeseen events. This is especially true in a law office. Build extra time into your schedule just in case.
Start each day with a schedule. Do this first thing every morning.
Minimize distractions. These will wreck your schedule. If you’re on deadline, turn off your phone and email. Disable popup notifications. Tape a “Do Not Disturb” sign on your door or work off-site where it’s quiet.

Money Management

Preparing a financial budget is as simple as taking a single sheet of paper and making two lists. On one list, write down all your monthly sources of income (wages, parents, loans, eBay sales, etc.). On the other list, write down all your expenses.

The first list will be easier. You know where your money comes from. The second list is harder. You will almost certainly underestimate how much you spend. That’s why you are so often dismayed at being unable to withdraw ATM money because your account is empty.

To get a handle on your expenses, keep a spreadsheet to track every single penny you spend for one month. Enter expenditures each day. 

Once you’ve got an accurate picture of income and expenses, compare the two lists. If income exceeds expenses, congratulations. You’re running a surplus. Open a savings account or take a trip to Miami. If you’re running a deficit, cut expenses or figure out how to boost income. Either way, add a cushion for unexpected expenses like car repairs or visits from the in-laws.

Five Training Tips for Budgeting Your Money

1. Set financial goals. What do you want to do with your money? Buy a new car? Pay off debt? Make choices and begin moving forward.
2. Be SMART. All financial goals should be Specific, Measurable, Achievable, Relevant and Time-bound.
3. Look to the future. Divide goals into short-term (less than one year), mid-term (one to three years) and long-term (more than five years).
4. Prioritize expenses. Some are essential and fixed (rent, car payment). Some are essential but variable (gas, food). Others are nonessential (Netflix, road trips). Cut costs from the third category first.
5. Eliminate debt. Borrowing is not a long-term financial strategy.

Sources:

• Entrepreneur http://www.entrepreneur.com/article/219553

• Duke University http://personalfinance.duke.edu/manage-your-finances/budget/discretionary-vs-non-discretionary-spending