My family and I have been living on a budget for nearly 10 years.Â Over that time, we’ve made our share of mistakes – and we’ve adopted some valuable habits.Â When making your budget, consider the following –
Do not wait until the last minute to make your budget.Â Our budget begins on the first of each month, so we sit down and write ours out a week or more before then.Â This gives us a chance to discuss the upcoming month – and it also gives us plenty of time to tweak the budget before the new month begins.
Do not use an unmanageable number of budget categories.Â It’s easy to get too complex – or too basic – when creating a budget.Â Use enough categories to “tell your money what to do”, but not so many that you are overwhelmed.
Do not use an unusable system.Â If you have a spouse who is comfortable using budgeting software, rock on.Â If not, stick with pen-and-paper.Â Use a system that is accessible for all involved.Â Which leads to the following –
Do not use a budgeting system that restricts total-family buy-in.Â If the system doesn’t work for everyone, it doesn’t work for anyone.Â When it comes to financial planning – I love to nerd-out.Â My awesome wife? Not so much.Â We want to work together to manage our finances, so our budgeting system has to be something that she will use and enjoy.
Do not forget annual expenses.Â It’s easy, when making that first budget, to focus on next-month’s expenses.Â Remember – there are taxes, fees, and insurance payments due on a non-monthly basis.Â These must be factored in when creating a budget.Â We use a savings account, make monthly “payments” into that savings account, and use those funds to pay for annual expenses.
Do not skip the emergency fund.Â Budgets are awesome – but they are not perfect.Â Unexpected expenses occur – which is why we focus on maintaining an emergency fund.
Do not keep your kids out of the loop.Â We have three kids, ranging in ages from elementary school to high school.Â We routinely include them (especially our older two) in discussions about money, financial planning, long term goals, and where we are headed as a family.Â They like being included – and are developing skills which will be beneficial for them in their adult lives.
Do not overestimate the amount of sacrifices you are willing to make.Â This is crucial.Â Sure, we all like to think of ourselves as frugal, but creating a super-tight budget, based on unrealistic expectations, is a recipe for failure.Â Obviously, we want to curb spending, but let us be true to ourselves.
Do not give up.Â The reality is, there will be months when we simply do not stick to our planned budgets.Â Life gets in the way, stuff happens, and it’s easy to feel discouraged.Â Don’t!Â Instead, regroup, focus, and move forward.Â Take the lessons learned, and incorporate those into a new, improved budget!
Living on a budget has been a blessing for our family.Â I hope that you have enjoyed this article.Â If so, please use the social media buttons below to share it.Â Thank you.Â Blessings.