Hello again!
Now that we have the basic outline for a budget, let’s cover a few items about the budget that will help you improve your current budget or help you start budgeting.
1. The name is not important
“Budget” has a negative connotation with many people. This is one reason why many don’t do one. One reason, it is hardly ever used in writing or conversation in a positive way. Have you ever been a part of the budget process for your work? If you work for a large employer or a government entity, you have my sympathies. When the boss comes into your office or the meeting room and announces it’s time to begin preparing the budget, you can usually hear the loud whimpers within the mind of everyone involved and a level of despair sinks in. For many, creating a budget might be a source of conflict or hardship between themselves and their spouses. Others will associate “budget” with lack of freedom.
You can use whatever name you like. “Spending Plan” or “Cash Flow Plan” are good alternatives. If your family’s last name is Smith, you can use “Smith’s Financial Road Map.” The importance of the budget is not how you refer to it, the importance is it’s purpose and that you stick to it once it’s complete. The budget is your plan for how you will reach your financial goals, so don’t worry about the name.
2. It’s yours
Your budget is completely dependent on you (and your spouse if married). It is based on your income and your expenses and what goals, both short and long-term, you would like to reach. This means you have complete control. If eliminating debt is your priority, you can form the budget around that objective. If you are trying to save for a house, you can create a budget that allows to do so. The primary reason for the budget is for you to take control of your income. You tell every dollar what you want them to do. If there are any restrictions, you provide them. If you don’t already budget, you will be surprised at the amount of stress a budget will eliminate since you will know where your income is set to go. Once you have the essentials covered, the rest is up to you. Even the essentials may be able to be adjusted. For example, if your gas and electric bill is high, you can seek ways to lessen the use, so you can apply even more to the whatever goal you’re trying to reach. You will also have a clearer picture of your overall expenses. You may not be spending the amount on items that you think, and if you find your spending more, then that can be changed too.
3. Don’t be afraid
It is human nature for people to avoid things that they fear or of which they don’t have knowledge. I am GUILTY of this. If you had told me even 5 years ago that I would be a business owner, have a website, and be posting a blog to help people manage money, I would never have believed you. Not being very tech savvy, I feared this new world. It’s been a process, but I learn and am more comfortable with the change every day. This is the same once you begin to budget. You will be bad at it at first. You (and your spouse) will not be sure how much to budget for most expenses; however, some expenses don’t change or if they do, it’s usually not by much. Mortgage or rent payments are examples of these. So when you start, write down the essential expenses you know for sure. If your electric bill is usually $200, on your first budget add 10% to be safe. If it’s a little more, take the amount from another item. If it’s less, you have a little more to add to another item to get you where you want to go.
4. The Great Spousal Communicator
Financial problems are at the top of the list for reasons people divorce in the United States. Sitting down with your spouse and working on the budget together is a great way to communicate with each other. You get a better understanding of each others desires and how to resolve any differences relating to your income. It’s also a fantastic way for both of you to see and understand the financial situation within the household. Both of you should be aware of what comes in and what goes out if something terrible should happen to the other, such as, illness or injury. But, it needs to be done together. Neither one should have the responsibility of managing the household finances alone. You two are a team with dreams and desires. You should determine your goals together, plan the path together, celebrate reaching the together, and enjoy them together.
Thank you again for reading!
Please contact me if you have any questions or would like to set up a free consultation via Zoom or phone. I can be reached through the website, www.ifcmoneycoach.com, by phone at (619) 551-4625, or by email at [email protected].
