I was at a finance committee meeting the other day and I kept hearing the group leader say that we could always come back to the budget later and adjust the budget up or down as needed. He stated that the budget was just a guide to how money would be spent. I almost cringed when he said that, because I would hate for people to use that thought process when planning a budget for their family.
I’m not telling you that you cannot adjust the budget as you go, because you will have definitely do it when needs arise, but I think a budget should be set with the mindset of getting it right. If your goal was not to get it right, then what motivation would you have to even try to get it right?
How do you look at your budget? Is it a guide? Or should you consider it a map? To me a guide is a suggestion on how to use something where a map tells you where to go and how to get there. I personally think a budget should be more like a map. It tells you where the paycheck needs to be spent. It may have a few different paths, but it will take you to the same place.
I look at the different paths as the changes you may need to make along the way. You may pay off a bill or get a raise, which would require a different path on the budget.
The key to getting a budget right is to look at your previous expenses. Plan your budget according to what you have been spending as well as the needs in the future. When I think of this way of planning I think of Christmas. It happens every year on the same date, but many of us still end up wondering how we will be able to afford gifts, food and travel. We wait till the last minute. Why not plan for Christmas all year long by setting some of your budget aside each month? You could do the same thing with a clothing budget, taxes or any other expense that occurs less than monthly.
A budget is definitely not easy, which is why many people do not have one, but it’s not rocket science. Those that choose easy will remain broke, while those that choose to do a little work will reap great benefits.
If you do not have a budget, take some time to get started on one. You will be so happy you did when you can finally see where all your money went for the month. Try to get the amounts right at first, but yes you can always adjust them as you go. The main thing is to use this budget to tell you where to spend your money each week/month.
Spend all the money in the budget. Tell it all where to go down to the last penny. This means that if all the bills are paid and you still have money left, you must include a line in the budget that tells you where that extra will go. (savings, emergency fund, debt reduction)
If you have a budget and find yourself out of money before the bills are all paid you may need to review your spending and either adjust the budget or adjust your behavior. Many of these ideas presented will help you revamp your budget.
Here are some things to remember when planning a budget:
- Spend all the money down to the last cent. Savings, debt reduction, emergency fund, new car fund etc. should all be part of the budget if you are able.
- Be realistic. Make your totals reflect what you actually spend. Ignoring the daily convenience store stop that costs you $4 each day on your way to work could cause you to come up $80 short in your budget if you do not include it. Being realistic will help you see the things that need to change.
- Make the budget before you get the money and before you spend any of it.
- Don’t forget to include all the essentials first, then if you have room; include items like savings, clothing, and gifts.
- Pay non-monthly items monthly. If you normally pay your car insurance every 3 months, total up the amount for the year and divide by 12. Put the amount you get into the monthly budget. Then you can put this amount into a separate account until it’s time for it to be paid. (online banking is great for this)
- Stick with it. Be consisitent, be persistent. If there is no money to attend a particular event, then just stay away.
- Surround yourself with people that have the same goals and values. If you have a friend that continually causes you to oversend or attend events you cannot afford, it would be best to keep a safe distance. Those that make fun of your new life are most likely the broke ones. They just hide it well.
- It’s easier to pretend there is not a problem. Face your fears head on and take control. You will be so glad you did in the end. Continually pretending that your budget s fine leads to serious problems down the road.
How do you look at a budget? What issues do you have with your budget?
Have any questions or comments?
making a habit out of living frugal…..
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