I can’t wait to share my thoughts with you all today! My wife lovingly calls me “the money man” and I really have a passion for this subject. Living on a budget is a MUST, as in it’s not optional…ever. At least, thats the way we treat it in our family. I know that making and maintaining a family budget may not be the most glamorous subject. In fact, many times it can be complicated and overwhelming. However, you just need to remember that rock-solid finances can have a monumentally positive impact on your marriage and family life.
I know first hand what financial stress can do to a person, marriage, and family. The stress gets to the point where it becomes unbearable. That’s not the vision I have for my family’s future, and I’m absolutely sure you would agree! Could you imagine driving a car with your eyes closed? You are asking for a wreck. That’s actually what it felt like for us before our family created our budget.
Let me give you some of my backstory. When I was fresh out of college with a sweet new job, my budget consisted of trying not to buy too expensive of things and occasionally checking my accounts in hopes I still had something left to spend. It seemed to work alright at the time, but I wasn’t saving anything. I was young and surviving; not exactly the recipe for lasting financial security.
Flash forward a few years later and one amazing (but expensive) wedding to my best friend. My techniques described before did not fare so well. We had bills building and the reality of newly acquired student loans setting in. Not to mention, the not so small fact that I had doubled my family without doubling my income. I knew this method for our finances was not going to work. There was a single solution to my problems: it was time to buckle down and make a budget.
When I decided to make the change for my family, I researched like crazy to find what would work best for our family and created a template that we have used every day since. Now, let’s move into present day. The budget I made that day (of course there has been some tinkering) continues to protect my family. Also, it gives me a guide to have honest conversations with my wife about what we can or cannot spend. Our budget has steered us through tough times and major purchases.
It has also been the framework that has revolutionized our finances and actually given us more financial freedom. We have found that our budget creates more opportunity for us to do what we love and to have fun.
Below, I describe each of the 5 key concepts that I use to make my budget and I hope that they can help you too!
1. Account for Every Dollar
It is a very simple equation: Income – Expenses = $0. Yet, I cannot stress this concept enough. You must give each dollar you make a home or you might as well consider it gone. This means having a plan for when you make more and a plan for when you make less. If you have debt, make sure you are setting aside the proper amount and if you make a little extra, put it towards that. If you have debt under control, work on creating your emergency fund and automatically transfer money into your savings account each month.
2. Be Realistic with your Income
For some, this may get a little complicated. If you work for commission or your hours are not guaranteed, it is important to sit down and review your past income prior to starting your budget. Look back over your last year and determine the minimum that you made in any given month. Next, look forward to your upcoming year and forecast any possible issues that could arise that would prevent you from reaching this amount. There is nothing more dangerous than a inaccurate budget. I also recommend that at the end of each month you compare what you made to what you expected. This will ensure your family remains on track.
3. Be Persistent and Consistent
Budgets require constant TLC (Tender Loving Care). It reminds me of the old saying, “How do you eat an elephant? One bite at a time.” If you wait until the end of the month and try to take on your budget all at once, you will find yourself extremely overwhelmed. At a minimum, you need to be updating your budget twice a week. However, I make it my goal to update mine at the end of every other day. When I only have a handful of purchases to input, I feel totally in control. When I get lazy or make excuses of why I’m too busy, getting my budget up to date feels like I’m climbing Mount Everest. Please don’t let all of your effort into making a beautiful budget go to waste. Take pride in keeping your budget up to date and you will see amazing results!
4. Prepare for the Unexpected
Life can be complicated and it can get messy. One thing you can say for sure is, “Life is unpredictable.” A budget can save you during these tough times. Building and maintaining an emergency fund should be a cornerstone of any budget. There are many ways to do this and the exact amount needed can be tricky to decide. The best advice I can give you is to look at your life, look at your bills, and look at what is important to you. Next, go into the pessimistic part of your brain and imagine something that would cause you to lose it all. How much money would it take to get back to where you need to be? That is what your emergency fund is for. I’m not saying to stuff every dollar you make into your mattress and wait for a disaster. I am saying that you need to be prepared. Set aside what you can each month and soon enough, you will build what you need.
5. Don’t Forget Fun
Last, but definitely not least, do not forget to have room in you budget for fun. I am a firm believer that you should spend money on what makes you and your family happy. Not to be morbid, but what’s the point of dying on top of a pile of cash? Get out there and do what your family loves, and what brings joy into your life! Don’t think of your budget as chains holding you back from what you want. Use your budget as a tool to be able to afford what makes you happy. Budgets can and should be a positive resource with the right mindset.
These tips have empowered our family though the highs and lows of marriage and parenthood. They have allowed us to build a beautiful life together while doing what makes us happy. There will always be times of stress and fear (that’s life). But thankfully, a budget can give you the clarity you need and tools to get through any financial situation.
Remember: Knowledge is power. A rock-solid family budget gives you knowledge of your finances and the power to turn your life towards the direction you want it to go. Stay tuned for more help with your budget as well as the release of our budget template!
Comment below and let us know what makes you or your family happy!
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